In the new regulatory landscape, stock exchanges still need to make cryptocurrencies sustainable

As the new year begins, it’s hard to remember another time when the cryptocurrency market and the overall mood surrounding the sector were so buoyant. Unlike previous cycles, this time appears less fragile and more sustainable. Regulatory certainty and the influx of institutional investment and interest mean that the future of cryptocurrencies is now inextricably linked to TradFi. But what does this mean for OG operators, CEX exchanges that have weathered the regulatory storm for so long?

2025 marks the first time that the existing market of native cryptocurrency operators, which includes industry giants such as Coinbase, Binance, Kraken and others, will have to compete with TradFi banks and brokers.

In the European Union, Mica organization It has created a smooth path for SCA-licensed banks and brokers to expand into crypto assets while ensuring that local companies and new entrants must do so. Submission Complete licensing procedures.

In the United States, many companies now I’m looking to the Trump administration to initiate executive orders favoring the cryptocurrency sector from his first days in office. Such a move would bring long-awaited regulatory clarity to the cryptocurrency sector in the US, where companies including Coinbase and Binance have long… killer With the Securities and Exchange Commission under Biden.

Trump now appears willing to offer some sweet relief – but it comes at a potential cost. Once the new administration gets things out of the way for crypto companies, it will become clear to everyone, including traditional banks, brokers and fintech companies. Robinhood, a company that straddles the boundaries of fintech and cryptocurrency, He added 420,000 customers during the post-election cryptocurrency boom last November.

So, some key questions. Will customers still use exchanges when they can easily trade cryptocurrencies via their bank or brokerage account? How will existing trading centers maintain their market position and continue to acquire new customers in this new favorable regulatory environment?

Navigate a new scene

While the suddenly crowded market presents unprecedented challenges to the established cryptocurrency sector, there are several factors that still work in its favor.

First, most banks and brokers seeking to launch retail cryptocurrency offerings are not necessarily looking to provide liquidity from scratch. A much faster route to market is to leverage existing under-the-hood liquidity pools through partnerships with cryptocurrency brokers and liquidity aggregators. For example, in May last year, Bitpanda extended Partnership with Austrian Bank Raiffeisen to 55 banks across the country in anticipation of new MiCA rules.

Through arrangements like these, centralized exchanges able to maintain liquidity will continue to serve as critical hubs for a growing industry, facilitating large-scale trading and playing a key role in price discovery.

Another unique offering of cryptocurrency exchanges in an increasingly crowded market is industry and technological expertise. Cryptocurrencies have a lot of unique characteristics, including the underlying blockchain technology along with innovations like staking and DeFi. In March 2024, cryptocurrency custodian Toros a partner With the Lido platform to allow Swiss banks to offer liquid shares to their clients.

Leveraging an established reputation, industry-wide networks and connectivity, CEXs can also play a role as a trusted partner for both enterprise and retail users navigating these unfamiliar waters.

While the emergence of regulation always paves the way for competition, the benefits work both ways. Especially for US cryptocurrency companies that have spent years either fighting the SEC or trying to stay under its radar, there is now an opportunity to compete on equal footing. Exchanges and other operators can demonstrate that they operate according to the same standards of compliance and transparency as any other financial institution, while enjoying a similar degree of freedom to operate.

While the cryptocurrency industry deserves a moment to celebrate, the reality is that the landscape is likely to change very quickly after the opening on January 20, with an influx of new operators and partnerships. Existing crypto companies will need to leverage their unique offering in this new competitive market, with the opportunity to act as a bridge between the worlds of traditional and emerging finance.