CRYPTO EXCHANGES THINK OUTSIDE BOX

Increase in unorthodox strategies as trading demand eases

WITH digital-currency trading volume having plunged, some of the biggest crypto exchanges are turning to unorthodox practices to boost activity and win market share.

Bitfinex, FCoin and OKex are encouraging startups to drive depositors to their online-trading platforms to get coins listed.

Other exchanges, such as Binance and KuCoin, are embracing listing fees that can differ by project. Many exchanges are also rolling out their own “native coins”, which traders then use to vote on potential listings.

The practices are in contrast to those at traditional exchanges, which charge lower flat rates and don’t require issuers to direct trading traffic to the exchange. Other bourses don’t poll existing users on which securities get to trade.

The embrace of the unusual comes as crypto exchanges feel the pain that’s swept through the digital currency market after coin prices collapsed 50 per cent on average.

Trading volume had plummeted 80 per cent since a January peak, according to CoinMarketCap.com data. New types of coins and exchanges, which are billed as cheaper and easier to use, threaten to eat deeper into fee revenue.

“The market downturn has certainly contributed to an increase in unorthodox strategies by token issuers and exchanges,” said Digital Asset Research director of technology research Lucas Nuzzi.

For coin issuers looking to get exposure to investors, the practices can be confounding. Christopher Franco, co-founder of Washington, North Carolinabased blockchain startup Expanse, said KuCoin quoted him a listing fee of 50 Bitcoins — about US$315,000 (RM1.3 million) at current prices. Expanse didn’t go through with a listing.

“We can pay for it, but it doesn’t justify the means,” he said.

KuCoin spokesman disputed the 50 Bitcoin listing fee, and said its listing prices vary by startup.

“The listing fee is not the key factor for listing a project, the project itself is,” said spokesman Miles Wu.

The market downturn has certainly contributed to an increase in unorthodox strategies by token issuers and exchanges. LUCAS NUZZI Digital Asset Research Director of technology research