Seems that the current downturn on the crypto market as well as overall alertness can cause multiple troubles for exchanges. Among some of the reasons are falling market value and increasing regulation.
Firstly, volatility of the market and troubles with different coins has made governments more cautious and careful when it comes to cryptocurrencies. Increasing regulation of cryptoassets has added costs for operators. New laws and restrictions are in the pipeline and even big exchanges cannot avoid the consequences. For example Binance announced that direct withdrawal and deposits were suspended in Brazil. The exchange issued a statement where it announced that this was the result of a change in the payments partner in the country, but the partner states that Binance did not adapt to provide the new KYC information required by Brazil’s central bank.
Another example: Huobi’s Thai branch, Huobi Thailand Co., will halt its operations from July 1st also due to legislation issues. Thailand’s Securities and Exchange Commission in May revoked the firm’s crypto-exchange license after it failed to set systems and personnel in accordance with rules and regulations, the regulator said in a statement.
Secondly, the market value of the world’s 500 biggest crypto tokens has slumped from a high of $3.2tn in November to less than $1tn.
“If there isn’t trading volume there is no money . . . it looks like it is going to be tough for quite some time,”said Julian Sawyer, former chief executive of crypto trading venue Bitstamp
After a long time of enormous profits on the crypto market, major digital asset exchanges now have to deal with completely different situation and now they are forced in to introducing redundancies. A former Gemini senior executive said the company’s recent announcement on cuts is just “the tip of the iceberg”, claiming the exchange “overhired” in last year’s crypto bull market.
Seems that Gemini is not the only example. US-listed Coinbase also announced plans to lay off nearly a fifth of its workforce. The reason could be that the exchange was recently accused of failing to do due diligence, among other things, after users lost large sums as a result of the de-pegging of stablecoins.
At the same time crypto exchange FTX, which has 300 employees, said it remains “strongly profitable” and did not announce any jobs cuts. OKX’s financial markets director, Lennix Lai, said the exchange plans to add 30 per cent to its 2,800-strong workforce in the next year. Binance, the largest exchange by volume, said it will continue its pace of hiring. Maybe it’s just an attempt not to show their problems, maybe they are managing the current situation properly — we’ll see…
Despite the fact that exchanges are not the ones to blame for the downturn in the crypto market, people automatically see them as “enemies” who have lost or even stolen their money. The general mistrust leads to growing pressure from every angle: governments, users and the whole community. Shortage of money doesn’t allow exchanges to cope with these obstacles as easily as they would do normally, and even leading exchanges have suffered from this situation, not to mention the smaller ones.