Exchanges pledged $2.5B to user protection funds after FTX’s collapse.
On June 14, blockchain analytics firm Nansen published a report stating that reputable cryptocurrency exchanges have implemented user protection funds following the collapse of FTX. Exchanges such as Binance, OKX, and Bitget have a combined $2 billion in nominal fiat protection funds. Huobi’s insurance fund is collateralized by 20,000 Bitcoin (BTC), and Coinbase offers up to £150,000 ($189,140) in insurance to accounts held by its UK customers. The Nansen researchers said:
“Proof of Reserves should become the minimum standard in the exchange industry, However, as stated above, these are both positive indicators for an exchange but do not guarantee its solvency.”
Binance has maintained the top spot for both spot and derivatives trading volume. In May, Binance had an overall market share of 69% and a monthly trading volume of $209.5 billion in the spot sector. Kraken’s trading volume increased the most in the spot markets, gaining 14.35% to reach $18.9 billion in the six months following FTX’s collapse, compared to the preceding six months. Meanwhile, Bitfinex’s trading volume fell the most, dropping 59.5% to $5 billion in the same period.
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All exchanges saw declines in crypto derivatives amid FTX’s collapse, except for Bitget, whose average six-month trading volume increased by 4.85% sequentially to $204.1 billion. The researchers stated that Bitget, Bybit, and Binance have performed relatively well since FTX’s collapse. However, Nansen warned that the uncertain regulatory environment in the United States could hinder exchanges’ growth, stating:
“The SEC Chair Gary Gensler has posited that nearly all tokens are securities. This has prevented many exchanges from operating in the US. If the US takes this official position, it could cause significant issues throughout the world for CEXs. It will be worth carefully monitoring the position taken here.”
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