The future of crypto: exchanges, regulations, and growth

Author: Ivan Egorov

Only a few years back, crypto was considered a hoax that only high risk takers with money to burn were willing to deal with. Today, governments are acknowledging cryptocurrencies, companies are allowing their clients to pay with crypto for products and services, and more and more crypto startups are popping up every day to support the booming industry.

The future of crypto looks bright. Finance Magnates reports that Western Europe, along with the US and the UK, are among the top markets with crypto adoption, despite Asia often being portrayed as the leading crypto haven.

So, is everything going smoothly with crypto? Not exactly.

Challenges that crypto exchanges will need to overcome

Just like any emerging industry, and in our case, also new technology and phenomena, crypto is going through a lot of changes.

• Rapid regulatory changes make it hard to keep up with the new rules.
• Ongoing compliance with demanding legislation can be challenging, as regulators often lack a clear understanding of how the market actually works.
• A fast-paced market evolution means there are big changes every week, and companies need to adapt to all of them to survive.
• Booming competition is becoming more ruthless as new players enter the lucrative market.
• Client education is largely in the hands of private companies, so it’s up to them to teach clients not only how to use the services but also why they need them.

What is happening to large crypto exchanges today?

The largest exchanges thrive in some markets but experience considerable pressure and are even blocked in others.

Binance has recently received full approval for crypto operations in Dubai, while simultaneously struggling with the US market. So, on one end, the leading crypto exchange is thriving, but on the other, it is still in a rather shaky position. Should the US government refuse Binance the right to operate in the country, other markets might follow as a precaution. In theory, this situation could be replicated in other exchanges and markets, driving exchanges and other crypto companies out of business.

This is all speculation, of course, as nobody truly knows what will happen in the crypto market tomorrow, and, possibly, even later today. So while the return on investments is outrageously generous, especially for established companies, the crypto market can completely change in a matter of weeks, and long-term prosperity is not guaranteed, no matter how successful you are at the moment.

What’s coming for crypto exchanges and the market overall?

While it may seem that regulation and compliance requirements somehow defeat the purpose of the original crypto idea, that’s what’s coming for the market.

Despite forecasts that regulation will end crypto, the situation is the opposite. More transparency and regulation mean the safety of funds and the expansion of the user base. Many individuals and institutions are hesitant about entering the crypto market, and advanced regulation can change that completely, increasing everyone’s prosperity.

Crypto gained a certain reputation due to the boom of semi-legal or illegal activities being funded with this payment method. This has threatened the well-being of the entire industry. Thankfully, with regulators stepping up, there is less unwanted trade happening and more perfectly legal and mundane operations being performed with crypto.

One of the big moves towards regulation and transparency recently was Bitcoin’s ETF approval in the US. This approval is likely to snowball into more similar approvals for many cryptocurrencies around the world, resulting in a huge boost for the entire crypto market.

FM reports that 90% of crypto trades today are handled by only 10 top exchanges. In the face of strict regulations and fierce competition, larger exchanges will continue to have an advantage over smaller ventures that lack the economy of scale and affluence to compete. However, some regions, such as the EU, known for their intolerance to market monopolisation, are likely to intervene and push for wider client and trade distribution.

Overall, the future is surely bright for crypto markets, but it’s also very volatile and unpredictable. Modern financial companies need to keep a close eye on what’s happening with crypto and be prepared to offer new services and cater to the fast-growing client base.