In response to the failure of FTX, prominent cryptocurrency exchanges like Binance, OKX, and Bitget reportedly formed user protection funds.
According to a recent research released by blockchain analytics company Nansen on June 14th. The nominal fiat protection funds held by these exchanges, which are intended to secure user cash and add an extra layer of security, total more than $2 billion. The Nansen researchers wrote:
“Proof of Reserves should become 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.”
Another well-known exchange, Huobi, offers an insurance fund with 20,000 Bitcoin as collateral, further strengthening user security. On the other hand, Coinbase provides insurance coverage for the accounts of its users in the UK up to 150,000 British pounds ($189,140).
With a market share of 69% in the spot market, Binance is still in the top spot and derivatives trading volumes. The exchange cemented its position as the leading spot trading platform in May by registering a monthly trading volume of $209.5 billion.
Kraken had a 14.35% gain in spot trading volume in the six months after FTX’s demise, which was a huge increase. Kraken reached a trading volume of $18.9 billion during that time because to the increase in activity. On the other hand, Bitfinex experienced the biggest loss in spot trading volume, with a drop of 59.5% to $5 billion.
After FTX’s demise, most cryptocurrency derivatives exchanges noticed a drop in trading volume. With its average six-month trading volume rising by 4.85% to $204.1 billion, Bitget stood out as an exception. Following the FTX collapse, Bitget, Bybit, and Binance all displayed comparatively high performance.
However, Nansen cautioned that the development of exchanges faces difficulties due to the ambiguous regulatory environment in the United States.