Bernstein Says Crypto Exchange Binance Is Not Likely to Fail

Binance is solvent, liquid and stable and this is evident in the exchange’s more than $55 billion in verifiable cold wallet addresses, Bernstein said in a research report Monday.

The crypto exchange can also “pass the test of withdrawals” as it did when some $6 billion of customer funds were withdrawn on Dec. 13, the report said.

“Binance’s undisputed market leadership has not been an accident – it has a long history of doing right by the customer,” the report added, noting that the exchange has made customers whole through hacks and regulatory challenges. The exchange is now around 75% of the global crypto trading market.

Bernstein says Binance faces two challenges. Firstly, it has an offshore holding company based out of the Cayman Islands, which means it must take “progressive steps moving towards an on-shore structure,” even at the cost of short-term business.

Secondly, following the demise of FTX, it is now a “virtual monopoly in global crypto trading.” While it can't do much about its monopolistic position, competition may now emerge from decentralized exchanges, as traders could diversify their activities toward self-custody and decentralized trading platforms.

Binance will continue to seek licenses across multiple jurisdictions, having obtained licenses from 14 countries so far including France, Italy, Spain and Canada, the note added.