Crypto winter will separate the men from the boys

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After the collapse of cryptocurrency exchange giant FTX in early November last year, the cryptocurrency market was shaken to the core.

At its peak in July 2021, FTX, which operated a crypto exchange and hedge fund, had over 1 million users and was the third-largest crypto exchange by volume.

It is therefore understandable that those involved in crypto transactions have questioned the stability and security of the broader crypto ecosystem beyond FTX. Many economic forecasters have predicted doom in the crypto markets.

However, there has been an uptick in the industry this week with global market capitalization, with the total value of all cryptocurrencies reaching over $920 billion at the time of this writing on Thursday morning.

This is an increase from $815 billion in mid-November 2022. As of November 2021, the global market capitalization was $2.9 trillion.

For now, it’s clear that other centralized cryptocurrency exchanges are well positioned to pick up where FTX left off and there are plenty of them, including Binance, Coinbase, Bitfinex, Kraken, KuCoin, among others.

According to crypto data firm CoinGecko, there are over 12,000 cryptocurrencies and 630 exchanges around the world.

Centralized cryptocurrency exchanges, or CEX as they are commonly known, act as intermediaries between buyers and sellers and earn money through commissions and transaction fees. According to Kenneth Rogoff, professor of economics at Harvard University, the emergence of exchanges has been a major factor fueling the growth of cryptocurrency prices.

Binance is the world’s largest crypto exchange by volume with around $60 billion in reserves and this week got its seventh regulatory approval in the European Union from Sweden, but for this article I’ll focus on Coinbase, a company publicly traded American company that operates a crypto exchange.

Coinbase has already established itself as a powerful brand that cares about regulatory compliance with an easy-to-use app. According to its website, their trading platform has over 108 million verified users in over 100 countries with $101 billion in assets.

To ensure its users aren’t harmed, Coinbase Chief Legal Officer Paul Grewal says enhancements to the platforms’ compliance program are aimed at ensuring its customers are safe and their money is working for them. .

Coinbase, a publicly audited company with cash reserves of over $5 billion, ensures that the future of cryptocurrencies is secure worldwide.

This is why, despite the bankruptcy of FTX, exchanges such as Coinbase and Binance are making leaps and bounds to further validate crypto trading around the world, including in Uganda where trading in assets such as cryptocurrencies and Forex is on the rise among young people.

But with the global economic downturn and the effects of the Russian-Ukrainian war last year, the crypto market has not been spared either.

Coinbase said this week that it was laying off 950 people, or about 20% of its staff. The job cuts come amid a so-called crypto winter that has seen crypto prices plummet, currencies such as Terra Luna crash, crypto lending firms such as Celsius Network and the fall of FTX, among other negative effects.

But the turmoil that the crypto winter has brought will clean up the crypto industry.

Mr. Martin Orena, is the CEO of DM Exchange, a Fintech company. @martinorena

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