LONDON : Cryptocurrency investors have grown more cautious about who they do business with, after being burned last year by sudden collapses of Celsius Network, Voyager Digital, FTX and others, and fearing a regulatory crackdown will put more pressure on remaining firms.
"Investors in this asset class have learned their lessons the hard way and now are being much much more picky about who to deal with," said Samed Bouaynaya, a digital asset portfolio manager at London-based hedge fund Altana Wealth. Binance did not respond to a request for comment but said in a statement last week that"customer funds are always safe."
Declining exchange balances of stablecoins and ether suggest that users are removing their assets from exchanges, although it is difficult to gauge what proportion of assets are moving to custody solutions, said Martin Lee, data journalist at blockchain tracker Nansen. European crypto asset manager CoinShares ramped up its counterparty due diligence after losing 26 million pounds in the collapse of FTX. It now quizzes trading partners about their operations, cybersecurity set-up, credit exposure, and exposure to various cryptocurrencies, said CEO Jean-Marie Mognetti.
While the SEC crackdown on Binance.US has raised questions over its future, traders say dealing with Binance is unavoidable. It is the world's largest exchange with around 60 per cent of trading volumes globally, according to Kaiko data.
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