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Georgetown University's Adam Levitin examines the lack of bankruptcy protection for people who entrust their assets to U.S.-based crypto-asset exchanges. He makes a case that legally, crypto-assets "deposited" with exchanges, are actually sales with the "possessory interest" going to the exchange. If the exchange goes bust, a "bankruptcy estate" is created, and those coins become its property, as do any coins that have been staked (placed in escrow) via the exchange. Secured creditors get first dibs on whatever is in the estate, so unsecured creditors (i.e., crypto "depositors") might get nothing. And any assets remaining for distribution to unsecured creditors may be frozen for years, and their values based on their value when the exchange tanked. Plus, the bankrupt exchange can legally claw back many of the withdrawals its depositors made over the 90 days before the bankruptcy.

The Bank for International Settlements (BIS) published a paper on the economics of crypto exchange tokens, which are blockchain-based assets issued by crypto exchanges that may promise holders discounts on transaction fees and access to certain platform services. They are an important funding source for centralized crypto exchanges, and they have been at the core of some of the biggest disruptions in the crypto industry. The paper develops a tractable model for the exchange rates of crypto exchange tokens that incorporates user demand, investment demand, and commonly observed pledges by exchanges to buy back tokens. It derives closed-formed solutions for the valuation of exchange tokens and the time required to fulfill the pledge. Buyback pledges increase the amount of funding raised by selling tokens. However, the additional amount raised is always less than the discounted cost of the buyback pledge. Future price manipulation by investors can further increase the cost of the buyback pledge.

"We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect transaction fabrication on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify wash trading on each unregulated exchange, which averaged over 70% of the reported volume. We further document how these wash trades (trillions of dollars annually) improve exchange ranking, temporarily distort prices, and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation."

DBS Digital Exchange, owned by DBS Bank of Singapore and the Singapore SGX stock exchange (10%) opened for digital asset trading. The DBS Digital Exchange will also provide tokenization of securities and other assets, as well as bank-grade custody for digital assets. The new exchange will facilitate spot exchanges from fiat currencies to cryptocurrencies and vice versa. The DBS exchange will only be open to institutional clients and accredited investors.

The Bank of Canada published a paper that provides an overview of crypto exchanges, contrasting their design with exchanges in traditional financial markets and discussing emerging regulatory trends and innovations aimed at solving the problems crypto-asset exchanges face. It draws particular attention to the "vast amounts" of crypto-assets that crypto exchanges hold on their users' behalf, "exposing users to continued losses from hacks, price dislocations and the whims of exchanges and third-party processors. The paper also points to important regulatory and oversight gaps between crypto exchanges and the infrastructure that supports traditional financial markets.

In August, BTC/USDT represented 71.23% of total volume traded into both fiat and stablecoin. Despite controversies, USDT continues to be the most popular stablecoin for Bitcoin trading, followed by USDC, PAX, and TUSD. Bitmax, a trans-fee mining exchange, constituted roughly half of all USDT trading volume across all exchanges. Unlike regular cryptocurrency exchanges, trans-fee mining exchanges refund the fees paid by traders in the form of the exchange's native token. While popular with traders, these exchanges have faced criticism from industry experts and were often compared to Ponzi schemes. These exchanges also incentivize wash trading.

Most USDT is used on centralized exchanges for arbitrage - profiting from price differences across exchanges. The way this is done in practice is that arbitrageurs first send USDT to their own wallet before sending to a different exchange. This is done to gain more control over and achieve lower transaction fees on USDT transfers between exchanges. Most of this activity takes place between Huobi, Binance, and Bitfinex. The data also highlights the flow of USDT from issuance to end use. All new USDT is first minted, then sent to Bitfinex, who controls the keys to the printer, before being transferred to other exchanges. In USDT's entire existence on Ethereum Tether has never burned any supply. According to Flipside Crypto, USDT is by far the most dominant medium of exchange on Ethereum. There's is over 7 billion USDT on Ethereum, yet only ~2 billion are considered active.

The Centre for Economic Policy Research (CEPR) published an article that documents the prominence of wash trading on unregulated centralized cryptocurrency exchanges. A wash trade is a form of market manipulation in which an entity simultaneously sells and buys the same or very similar financial instruments to mislead the market or regulators. Over 70% of reported volume on unregulated crypto exchanges consists of such trades versus minimal amounts on regulated exchanges such as Bitstamp and Coinbase (the paper doesn't reveal the names of the unregulated exchanges it studied).

Thailand's Securities and Exchange Commission has announced new rules that restrict crypto exchanges from providing services related to meme tokens such as Dogecoin, fan tokens or tokens issued by influencers, non-fungible tokens and exchange tokens (proprietary coins issued by crypto exchanges that can be used to trade and pay fees). After publication in the Government Gazette, the Notification has become effective from 11 June 2021 onwards without retrospective effect. https://www.sec.or.th/EN/Pages/News_Detail.aspx?SECID=8994

As least 75 crypto exchanges have closed down due hacks, scams or simply disappeared for unknown reasons so far this year. According to the Crypto Wisser Exchange Graveyard five of the exchanges were labelled as scams, and four including Altsbit, and Nerae, were flagged as being hacked. In total 31 were shut down voluntarily while 34 were labeled as 'MIA' for disappearing with no explanation. The growth of DeFi and the rise of decentralized exchanges in 2020, increasing regulatory pressures, and hacks and scams were cited as factors.

The U.S. Securities and Exchange Commission (SEC) sued Coinbase on allegations of violating federal securities law, a day after filling a similar suit against Binance. According to the SEC, Coinbase has operated as an unregistered broker, exchange and clearing agency simultaneously, arguing that it solicited customers, handled orders, allowed for bids and acted as an intermediary all at once. "The Coinbase Platform merges three functions that are typically separated in traditional securities markets - those of brokers, exchanges, and clearing agencies... Yet, Coinbase has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities markets." https://www.sec.gov/news/press-release/2023-102

The U.S. Securities and Exchange Commission (SEC) has rejected an application for a spot bitcoin exchange-traded fund (ETF) from Ark 21Shares (filed on behalf of the Cboe BZX Exchange), citing a lack of investor protections. [Hit repeat!] "The Commission concludes that BZX has not... demonstrate[d] that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and in particular, the requirement that the rules of a national securities exchange be 'designed to prevent fraudulent and manipulative acts and practices' and 'to protect investors and the public interest'." The SEC has repeatedly rejected spot bitcoin ETF proposals, but showing a clear preference for bitcoin ETF's that trade bitcoin futures.

"An exchange-traded product (ETP) tracking the price of the XRP cryptocurrency has gone live on Switzerland's primary stock exchange SIX."

Swiss stock exchange SIX's digital exchange will go live with a native token and an "initial digital offering" (IDO) service in 2020. That would follow a trial expected to be completed late this summer. https://www.coindesk.com/six-stock-exchange-may-issue-its-own-token-says-exec

Bitfinex has reportedly raised $1B worth of US dollars, Bitcoin and Tether with its UNUS SED LEO exchange utility token offering. LEO lies "at the heart of the [Bitfinex parent] iFinex ecosystem" and will be useable for a variety of exchange-based activities.

A decentralized exchange or DEX is a place where people can go to trade cryptocurrencies without an intermediary. To better identify what a decentralized exchange is, it's important to first understand how centralized exchanges work.

This review of 16 leading crypto-asset exchanges, including the seven that contribute prices to the CME Bitcoin Reference Rate, found that just four were found to be subject to a significant level of trading-related regulation (itBit, eToroX, LMAX Digital, and Currency.com). Seven of the remaining exchanges, including Coinbase, operate as licensed Money Service Businesses (MSBs) or equivalent, but their trading activities are effectively unregulated. And three of the top exchanges appear not to be subject to any regulatory scrutiny whatsoever (Bittrex, Luno, and Bitfinex).

Standard Chartered's innovation arm, SC Ventures, will establish a crypto-asset brokerage and exchange platform, in a joint venture with BC Technology Group, a Hong Kong-based investment company specializing in digital assets. BC Technology operates OSL, the first crypto-asset exchange to be licensed by Hong Kong's Securities and Futures Commission. The new exchange platform and service will be based in the UK and target the European institutional investor market. It plans to launch the new service in the fourth quarter. This comes shortly after HSBC said it has no plans to launch a bitcoin trading desk or any other crypto-asset services.

New York-based exchange-traded product sponsor and asset manager WisdomTree is expanding its digital assets range with the launch of a new Ether (ETH) exchange-traded product on two European stock exchanges.

CryptoCompare has revised its exchange rankings and the world's largest crypto exchange by traded volumes. The top ten crypto exchanges are Gemini, Paxos' itBit, Coinbase, Kraken, Bitstamp, Liquid, OKEx, Poloniex, bitFlyer and Bitfinex.