Cryptoexchanges should better establish themselves
“Some cryptocurrency exchanges are at risk of falling behind should they fail to build a concrete position,” said Kim Sung-ho, a partner at Hashed during an event dubbed Asia Digital Asset Exchange 2020 Strategy VIP seminar, stressing that the trading platforms should take a leap next year to overcome the risks in the business. At a panel discussion session, Kim said that “global operators such as Coinbase and Binance are transforming themselves into an integrated financial platforms” to the question about the role and future of the cryptocurrency market. “As their influence grows bigger, they will likely become the target of attention by the authorities. They should provide quality service through close communication with the government.” The major challenge for them is regulatory risk. “To comply with the regulation, there should be a great deal of compromises, and the crypto exchanges could lose their competitiveness during the process,” Kim said. “If the platforms are preoccupied with securing bank accounts, it will eat into time required to meet client demand.” But some participants said that it would be beneficial to stick to regulation, since institutional investors favor exchanges that follow the rules. “Since the cryptocurrency market is fraught with risks, it is important to choose an appropriate trading platform,” he said. Pyo Cheol-min, CEO of blockchain startup Chain Partners, the economies of scale plays into the business. Let’s say an exchange is to provide a loan product. The more the users, the lower the rate. Still, some say that local cryptocurrency exchanges have missed the opportunity. “Until last year, local crypto exchanges were able to offer comparable loan services to what Binance offers,” Pyo said, “But they are not on the same level in competition.” “Korean platforms are less competitive and have lost what they have due to strong regulations. So, it is both tricky to operate either within or outside of the regulatory framework,” he said. Daniel Chang, co-founder of Hoo.com, said that profitability also worsens across the board. “If the number of clients stands at fewer than 10 million, it is hard to grab attention,” he said, “so, they should work together to improve the reputation of blockchain and cryptocurrency.” The experts said that the building of a fair system is critical. “It will take several years to settle with the regulation. In the process, the winners and losers will be determined,” Kim said. “Before regulation comes out, all exchanges should provide fair and quality service.” Chang echoed the view. “Putting aside the political issues, the exchanges should come clean in order to maintain stable revenues,” he said, “Long-term profit is important.” The hot-button issue in the crypto circle is, Kim said, Digital Currency Electronic Payments in China, Facebook’s Libra and DiFi. “A number of exchanges compete to introduce new businesses, such as staking. I am looking forward to seeing their achievement,” Pyo said. “Blockchain itself will have limitations, but derivative products based on that could gain popularity,” said Chang.