Funding freeze

Earlier this month the US Securities and Exchange Commission filed lawsuits against large centralized crypto exchanges Binance and Coinbase accusing both of violating securities laws. The crypto exchanges have been having a tough time as highly profitable trading by individuals normalizes and trading by institutions is muted, takes place at other venues, or is over-the-counter. Notwithstanding the rebound in crypto currency prices, institutions have yet to develop commercial applications for the technology. Meanwhile, equity funding for centralized crypto exchanges dropped from USD 4.9 billion in 2022 to zero so far in 2023. One could say barriers to entry are increasing as capital is scarce and regulatory requirements increase which is favoring incumbents. Skeptics would say recent developments mark the end of centralized crypto exchanges in their current form.

Source: CB Insights, 2023.