Crypto.com Shutdown in U.S. Still Leaves Customers Confused: Here’s What it Means for You
Crypto.com suspending US institutional crypto trading operation. More signs of Crypto Exodus trend?
- Crypto.com will suspend institutional crypto trading in the U.S.
- Its namesake arena in LA will remain open.
- But what does it mean for retail and non-U.S. institutional traders?
Last June 9, Singapore-based crypto exchange Crypto.com announced that it would no longer offer services to institutional clients in the U.S., effective June 21. The exchange cited “limited demand” from these customers given the current crypto market conditions.
While the shutdown impacts institutional trading, Crypto.com assured retail investors they can still use the platform in the U.S. This includes the exchange’s CFTC-regulated derivatives trading.
The Difference: Retail and Institutional Crypto Traders
Institutional investors are companies who trade and manage assets on behalf of clients. This includes hedge funds, family offices, proprietary trading firms and banks. Whereas, retail traders are individual investors who trade for themselves.
Institutional traders have higher minimums and regulatory requirements and use crypto to speculate, hedge risks and diversify portfolios. They often deal in much larger sums than retail traders, who buy and sell for personal use and investment.
Worsening Crypto Climate In The U.S.
On the closing, Crypto.com said in a statement, “We recently suspended institutional trading in the U.S. due to limited demand in current markets. Impacted users were notified to ensure a smooth transition.” The firm said it may reopen institutional services in the future but declined to elaborate.
However, despite the public reasoning, many observers believe that the move is driven by the increasing regulatory hostility in the United States. The move coincided with lawsuits filed against Binance and Coinbase by the SEC over the previous week. The regulator alleges both of the exchanges—the two largest in the world—violated U.S. securities laws.
Earlier in the year, on April 17, the SEC charged the crypto exchange Bittrex and its co-founder William Shihara, for operating an unregistered national securities exchange, broker, and clearing agency. Kraken, another exchange, had settled a separate case with the SEC back in February.
What It Means
The shutdown illustrates diminished institutional demand amid 2022’s crypto winter. But resilient retail interest shows crypto’s continued appeal as a high-upside asset class. While institutional trading is halted at Crypto.com, retail investors can still use its spot and derivatives exchanges. Your ability to buy, sell and custody crypto remains unchanged.
For non-U.S. institutional investors, things should continue as normal. Investing interest in crypto assets has remained strong despite the market downturn, with some markets continuing to grow despite the crypto winter. However, for those looking to invest as an institution on Crypto.com, only companies are eligible for an institutional account, which has different onboarding and KYC requirements.
Non-U.S. institutional investors are also able to continue trading in USD.
Institutional investors hoping to open a non-U.S. account must do so via Crypto.com’s official website . Applicants must share their Expected Monthly Trading Volume, Total Assets Under Management (AUM), and other key metrics. Retail investors are not required to do the same.
As markets hopefully improve, Crypto.com could yet revive in institutional trading business in the U.S. For now, the company will be looking for a calmer and less combative SEC, and a prolonged increase in institutional interest.
