Crypto isn't going to see exchange consolidation for 2 reasons, according to trading exec

It seems like it's almost every month that a new exchange launches in the cryptocurrency market. 

Over the last year, a number of new crypto marketplaces have come online including derivatives players like CoinFLEX and institutional-aimed venues like AAX in the United Kingdom. In the last few months, The Block data shows that legitimate trading volumes on spot crypto exchanges is down more than 50% since June. 

The increase in competition and decline in volumes might seem like the perfect recipe for consolidation, but Max Boonen, the chief executive officer of over-the-counter trading firm B2C2 says that is not the case. 

"I used to think they would consolidate, but I don't think so," he said on a recent episode of The Scoop

He noted two reasons. First, he said the 2017 boom provided many exchanges with a solid war chest to stay in business and compete. At the same time, captive user-bases keep clients trading on various platform. 


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"I mean, Kraken and Coinbase all of those guys are doing healthy volumes and some of them managed to have a somewhat captive user-base."

Boonen added that newcomers that offer a new kind of user experience have also seen a significant growth:

"And you see that with a lot of the newcomers, right? Binance. Incredible success story. How long did it take for Binance to really take off? Less than six months. There's a few new exchanges, CoinFlex, FTX, those guys in a few months have really taken market share."

He thinks that the market structure of crypto will look like FX in which there will be many brokers to choose from. 

"You know, you have dozens of FX Brokers that you can pick from, obviously some bigger than others. But it's possible that we're just never going to have consolidation or it's going to be at the margin. It's not necessarily going to be, you know, exchanges dying left and right."

About Author

Frank Chaparro is the Editor At Large at The Block. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. He runs his own podcast The Scoop and writes a biweekly eponymous newsletter. He leads special projects, including The Block's flagship podcast, The Scoop. Prior to The Block, he held roles at Business Insider, NPR, and Nasdaq. For inquiries or tips, email [email protected].