Most people likely have not heard of Bittrex, as it is ranked as the 51st most active exchange by trading volume on CoinMarketCap. A sliver of people who entered crypto during the heady days of the initial coin offering (ICO) boom beginning in mid-2017, may remember the exchange. Crypto class of 2017 was pampered in many ways, with infrastructure already laid out before the first major token mania. Bittrex, one of the bunch, served an important role as a gateway between the world of fiat and crypto, providing traders in the U.S. with a trustable exchange.
Binance, another exchange, grew to become one of the most valuable crypto companies ever. Yet, exchanges like Bittrex are becoming increasingly irrelevant as decentralized finance (DeFi) becomes easier to use. At a time when these exchanges have limited liquidity and token offerings yet more stringent KYC protocols, they are in an impossible position.
The exchange business itself is going through a reckoning. The U.S. Securities and Exchange Commission has decided basically all cryptocurrencies besides bitcoin are securities and that crypto exchanges will need to be licensed as securities dealers. Seeing exchanges close up shop suddenly, or be forced to geo-block users, likely left a lasting impression of the importance of self-custody.
Bittrex stands as a symbol for the now forgone “sh*tcoin era”. It filled the necessary role of listing tokens faster than more lawsuit-averse platforms like Coinbase and offshore companies like Binance. It is unclear what will come from Bittrex’s lawsuit with the SEC, which accused the firm of listing six cryptocurrencies that are securities.
The crypto industry is putting a lot of effort into defending bucket shops, rather than coming to terms with the SEC regulations. The SEC gets a lot of flack for “regulating by enforcement”, but its primary responsibility is setting a bar for disclosures so investors can operate on a relatively-level playing field.
It is sad to see Bittrex go, yet the crypto industry has matured since then. Seeing exchanges close up shop suddenly is a reminder of the importance of self-custody.