‘Crypto Winter’ May Force More Exchanges to Consolidate or Shut Down
As one of the crypto industry’s top exchanges announces its planned shutdown, an industry insider noted that the ‘crypto winter‘ seems to still be having its toll on the space and more closures could be in the offing.
Bobby Ong, the co-founder of Asian cryptocurrency aggregator, CoinGecko, which analyzes the activities of exchnages as other industry data, makes the point after Coin Exchange informed its users on Oct. 1 that it is closing shop due to financial reasons.
The exchange states: “It is with great regret that we must inform the community that the board of directors of CoinExchange.io has decided to close down the exchange. This is purely a business decision and there has not been a security breach or any other type of incident. Unfortunately it is no longer economically viable for us to continue offering market services. The costs of providing the required level of security and support now outweigh our earnings.”
Trading and deposits on the platform would cease by Oct. 20 even though the website and withdrawals will remain operational until Dec. 1 by which all users funds are expected to have been removed. The exchange however notes in parting that they “may return in the future if market conditions change”.
Impact of crypto winter still biting
Ong views that the prolonged slow down in the crypto market for about two years could have contributed to the proposed closure. He says about the Australian cryptocurrency exchange that launched in March 2016:
“I’m quite surprised to hear that Coinexchange has announced that they are shutting down. They have been operating for several years now without much user complaints. I find the timing and reasons for the shut down odd as it came really soon after Nova Exchange made a similar shutdown announcement with almost similar reasons. As the crypto winter continues further, I would expect more cryptocurrency exchanges to consolidate or shut down.”
The bear market impact may also have necessitated some major exchanges devising additional ways to cultivate new and retain existing users.
Exchanges continue to survive e.g. Binance
One of such is Binance’s recent adding TRON (TRX) staking to its lot – hold users funds to support the operations of a blockchain network in return for for a reward. Though not new, the move has triggered some questions despite Binance has informed that it will begin to take hourly snapshots of balances of TRX users on its platform to calculate their rewards.
As the world’s largest cryptocurrency exchange, Binance’s eligibility to join the TRON staking programme on Oct. 1 which has seen it rise to be TRON’s number one super representatives (SR) according to TRONSCAN – with more than 12 billion votes (or about 60% 0f the voting power) – has been questioned. It leaves the closest SR, Sesameseed, at 510,801,472 votes (or 2.52%). Binance’s criticism for joining to stake TRON comes after a report’s claim that only one address is responsible for over 99.9% of the votes the Binance SR received to gain the majority of the block rewards. What ordinary TRX token holders would gain and whether the move won’t encourage “whales” activities to pump the altcoin were also raised.
But what does Binance develop on the Tron blockchain? Where is the benefit for the TRx token holders? Except that Binace cashes the rewards? What do I miss here?
— Nuzumaki the Fishworks (@Nuzumaki) October 2, 2019
CoinExchange’s not offering fiat money on its platform leaving users to only trade in alts against ETH, BTC, LTC, ETC and DOGE was the main fear for traders at first but it sesm to be closing with its record in tact. To safeguard against a sudden or closure or a closure notice, Ong advises that users ought to take precautions.
“As always, traders should exercise caution when selecting the exchanges they use to trade and should choose to trade on a large, regulated exchange given a choice”.