Piper Sandler analyst Richard H. Repetto is of the view that Binance’s acquisition of cryptocurrency exchange FTX will benefit the brokerage CME Group CME.
Binance entered into an LOI (Letter Of Intent) to acquire FTX, which was confirmed by both CEOs through Twitter posts.
Repetto notes that both Binance & FTX have U.S.-based businesses that are separate from their international businesses and may, therefore, not be impacted by the events.
Bottom line, Repetto thinks the sale of FTX could put a damper on any near-term approval of its non-intermediary clearing model, which is a positive for CME.
The analyst noted that in the past weekend, Binance CEO Changpeng “CZ” Zhao announced on Twitter that the exchange would begin unwinding its position in FTX Tokens FTT/USD, the exchange token of FTX.
This, combined with revelations in a media report from the prior week that Bankman-Fried’s trading firm, Alameda, held a large portion of its balance sheet in FTT and was using FTT as collateral for certain trading activities, fueled concerns about FTX’s financial stability.
Thus, investors began selling FTT (causing a rapid decline in the price of the cryptocurrency) and moving funds away from FTX.
On Tuesday morning, FTX reportedly halted withdrawals on its platform prior to Bankman-Fried’s announcement on Twitter that Binance would be acquiring FTX.
While the liquidity issues of FTX do not appear to be directly connected to FTX.US, given the potential recessionary macro-economic environment Repetto doubts the CFTC would risk introducing a new clearing model even for restricted crypto assets.
Price Action: BTC is trading lower by 9.19% at $16,844 on the last check Wednesday.
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