The Growth of Binance and the Consequences
According to former BitMEX CEO Arthur Hayes, the explosive growth and success of Binance, an independent crypto exchange, has led to heavy-handed enforcement actions against it by traditional financial and political establishments. This comes after Binance admitted to violating US laws related to money laundering and terror financing.
Binance’s Challenge to the Status Quo
Hayes points out that Binance has allowed everyday people to own intermediaries and cryptocurrency assets without relying on traditional players. He also highlights how centralized exchanges have used tools of the state and legal structures to disintermediate the institutions that were supposed to run the global financial system.
Chinese Capital Flowing into Bitcoin
Hayes suggests that Chinese state-owned enterprises, manufacturers, and investors are likely to invest capital offshore due to a lack of attractive returns domestically. He explains that if China is printing yuan, it will make its way into global markets and support the prices of risk assets like Bitcoin. With Hong Kong’s recent approval of licensed cryptocurrency exchanges, Chinese investors now have a means to purchase Bitcoin legally.
The Impact on Dollar-based Credit and Hard Monetary Assets
Hayes argues that as China increases the availability and affordability of Yuan-based credit domestically, the price of Dollar-based credit may fall. This could lead to an increase in the price of fixed supply assets like Bitcoin and gold in terms of dollars. He also believes that the fungible nature of global fiat credit will result in dollars flowing into hard monetary assets like Bitcoin.
Hot Take: The Consequences of Binance’s Success
The rapid growth and influence of Binance have attracted heavy scrutiny from traditional financial and political establishments. While Binance revolutionized cryptocurrency trading by allowing everyday people to participate without relying on traditional intermediaries, it also faced legal repercussions for violating US laws. The treatment of Binance and its founder CZ highlights the arbitrary nature of punishment by the state. Additionally, Hayes predicts that Chinese capital will flow into Bitcoin as Chinese investors seek attractive returns offshore. This influx of capital could have a significant impact on the price of Bitcoin and other hard monetary assets.
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