A total of 75 cryptocurrency exchanges have already shut down so far this year by either voluntarily shutting down, getting hacked, being shut down by a government, or simply disappearing from the web.
According to Cryptowisser’s Crypto Exchange Graveyard, the figure is p 56% from last year and is showing no signs of letting up. In a press release, the firm points out that cryptocurrency exchanges have been dealing with “competition, saturation and forever increasing regulations” as factors behind the shutdowns.
It points to the growth of derivatives, non-cryptocurrency alternatives, and decentralized exchanges as potential reasons for over 75 exchanges shutting down so far this year. The growth of DeFi is seen as a factor as well, as any exchange that isn’t offering services or coins associated with it is likely getting left behind.
Regulatory pressure has been increasing for cryptocurrency exchanges, so much so some were unable to keep up with the requirements and had to shut down. The document points to Dutch exchange NLexch, which shut down last month over a demand from the central bank of the Netherlands, De Nederlandsche Bank, requiring crypto businesses to register with it. The exchange noted:
- The fees charged in the whole process are very high. The cost of providing the required level of security, support and technology is not economically feasible on our own.
Other cryptocurrency trading platforms shut down after being hacked. Just last month, Singapore-based trading platform KuCoin was hacked for over $200 million worth of cryptoassets, but managed to track down its hackers and will keep running.
Its worth noting CryptoCompare Exchange Review report for August 2020 has revealed that so-called Top-Tier cryptocurrency exchanges have seen their trading volumes soar by 58.3%, while Lower-Tier crypto trading platforms saw their volumes increase 30.2% over the same period. The rise saw Top-Tier exchanges start representing 64% of the volume.
The rise of Top-Tier exchanges implies cryptocurrency investors are looking for established platforms they can trust with their funds, in a trend that has been rising ever since the price of bitcoin climbed back into five-figure territory, above $10,000 per coin.
It’s also worth noting that some of the cryptocurrency exchanges that shut down so far this year were simply labeled as “MIA” for Missing in Action, meaning they simply disappeared from the web.
Featured image via Unsplash.