Exchange pledges $2.5B in user protection fund amid FTX collapse: report

According to a new report published by blockchain analytics firm Nansen on June 14, most reputable cryptocurrency exchanges adopted user protection funds amid the FTX collapse. Together, exchanges such as Binance, OKEx and BitGate have a combined total of over $2 billion in nominal fiat hedge funds. Meanwhile, Huobi’s insurance fund is pledged by 20,000 bitcoin (BTC), while Coinbase insures UK customer accounts for up to 150,000 British pounds ($189,140). The Nansen researchers wrote:

“Proof of reserves should be the minimum standard in the exchange industry, however, as stated above, these are both positive indicators for an exchange, but do not guarantee its solvency.”

Among other items, Binance has maintained the top position with respect to both spot and derivatives trading volumes. In the spot segment, the exchange had a total market share of 69% and a monthly trading volume of $209.5 billion in May. In the spot market, Kraken saw the biggest increase in trading volume, reaching $18.9 billion, up 14.35% in the six months following the FTX collapse compared to the previous six months. Meanwhile, Bitfinex fell the most in trading volume, falling 59.5% to $5 billion over the same period.

For crypto derivatives, all exchanges except BitGate saw declines amid the collapse of FTX, whose average six-month trading volume increased 4.85% sequentially to $204.1 billion. Bitgate, Bybit, and Binance have performed relatively well since the collapse of FTX, the researchers wrote. Still, Nansen cautioned that the uncertain regulatory environment in the United States casts a shadow over the exchange’s growth:

“SEC Chairman Gary Gensler has recognized that almost all tokens are securities. This has prevented many exchanges from operating in the US. If the US takes this official position, it could cause significant problems for CEX around the world. It would be appropriate to carefully monitor the position taken here.

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