Cryptocurrency investors have recognized the need for enhanced Crypto Risk Management practices, after the sudden collapses of prominent platforms such as Celsius Network, Voyager Digital, and FTX.
As concerns about regulatory crackdowns and the safety of remaining firms persist, investors are taking precautionary measures to safeguard their assets.
Lessons Learned and Adjusted Crypto Risk Management Measures
Having experienced losses due to platform bankruptcies, institutional crypto investors are adopting new risk management strategies.
These include selecting exchanges with stronger asset protection, conducting thorough due diligence on trading partners, and executing trades in smaller increments. Industry data and executives affirm these proactive approaches.
Further, the objective is to ensure greater security and minimize potential risks associated with counter-parties.
Compliance Scrutiny and Search for Reliable Exchanges – The Recent Scrutiny Faced by Binance.US and Coinbase Global
The SEC has raised concerns about the future of these exchanges.
However, industry experts suggest that dealing with Binance, the world’s largest exchange accounting for 60% of global trading volumes, remains inevitable. In response, investors are prioritizing exchanges that enable settlement, asset custody with trusted third-party custodians, such as Copper in the UK and Fireblocks in the US.
Despite concentration risks, investors are actively seeking reliable exchanges while closely monitoring regulatory developments.
Volatility and Regulatory Challenges for Crypto Investers
Lastly, as the crypto market faces ongoing volatility and regulatory challenges, crypto investors are recalibrating their risk management approaches.
Heightened due diligence, asset protection, and cautious engagement with exchanges are becoming standard practices. The industry’s focus on counterparty credit and risk mitigation reflects a growing commitment to protect assets and navigate the evolving crypto landscape.