Centralized cryptocurrency exchanges (CEX) remain key to attracting mainstream retail as this nascent industry has made notable moves in the wake of the FTX scandal.
Whether FTX’s collapse has caused losses at least $8.9 billion for its user base, CEX remains the first interactive layer of choice for retailers to buy their first cryptocurrencies.
Ruslan Fakhrutdinov, CEO of crypto exchange X10, said the next 100 million retailers will likely enter the industry through CEX. He suggested that centralized exchanges would likely drive user adoption:
“Centralized exchanges are ahead of the game at the moment. However, when bringing a new user into the space, it is essentially much easier to move them from a centralized exchange to a hybrid exchange.”
New investors mainly choose CEX because they have confidence in the host company and have an easier trading experience.
According to Fakhrutdinov, to attract more traditional retail investors, hybrid and decentralized exchanges need to improve user experience and innovate marketing methods:
“Incorporated exchanges are adopting the traditional marketing methods of the crypto space. Meanwhile, to attract conventional retailers, their approach needs to be a little different. It needs to be more like traditional think tanks* than just focusing on crypto.”
Combined Cryptocurrency Exchange Could Reestablish Trust After FTX Scandal
In contrast to Bitcoin’s decentralized nature, CEX is controlled by a central party or company, creating third-party vulnerabilities.
Even though there are other new alternatives like decentralized exchange (DEX) and the combined exchange, CEX still controls the majority of cryptocurrency trading volume.
According to Dune, cumulative trading volume on DEX obtain 3.56 billion USD in the last 24 hours, four times lower than the 15.1 billion USD that Binance – the world’s largest CEX – accumulated.
DEX metrics for the last 24 hours. Source: Dune
Hybrid exchanges are emerging as a middle ground between CEX and DEX, combining the workflow and trading experience of centralized exchanges with the non-custodial elements of exchanges decentralized.
Fakhrutdinov emphasized that the combined exchanges could help restore confidence in the crypto industry following the departure of FTX:
“For now, I would say that the next generation of crypto exchanges should be trustless, but not necessarily permissionless.”
Robinhood’s acquisition of Bitstamp is a positive sign for institutional adoption
On June 6, stock trading app Robinhood announced it was buy cryptocurrency exchange Bitstamp for $200 million, allowing the application to serve institutional clients in the United States.
Fakhrutdinov said Revolut is also rolling out its cryptocurrency exchange and these are positive signs for institutional crypto adoption that will bring more “retail flows” in the industry.
Revolut has launched a cryptocurrency exchange for UK users in early May.
*Think tank: a group or institute organized to focus on researching and finding solutions to certain problems, especially in the fields of technology, society or political and military strategy.
Itadori
According to Cointelegraph
