World’s oldest crypto exchange is staying out of the altcoin race
Bitstamp will not engage with smaller cryptocurrencies that are rising in popularity such as dogecoin, bucking a trend set by other prominent exchanges keen to cash in on the craze.
So-called altcoins have been steadily gaining traction among the crypto community during 2021’s bull run, as traders seek out major windfalls by investing in coins that might become the next bitcoin or ether.
Dogecoin, a cryptocurrency started as a joke in 2015, rose as high as $0.74 in May, powered by high-profile tweets and the coin’s debut on major exchanges including Kraken, Gemini and Coinbase. It has been publicly supported by the likes of Tesla boss Elon Musk, entrepreneur Mark Cuban and singer Dionne Warwick.
Bitstamp chief executive Julian Sawyer said all tokens listed on the world’s oldest crypto exchange must meet stringent requirements, and pass internal analysis that includes scrutinising the coin’s origins, governance, security and other aspects.
“Fundamentally you have to look at the basics, which is why we only want to list those assets that have some substance behind them, some liquidity,” Sawyer said in an interview with Financial News.
“The issue is that if you go to some that are hyped up by a billionaire’s tweet, or crashes on a billionaire’s tweet, we don’t think that’s right. We’re here to protect your money in your investments.”
Dogecoin’s price has crashed back down to levels of around $0.30 this month, as hype around the coin and cryptocurrencies in general has faded. The sector has been marked by a sea of red in recent months, with digital assets posting their sixth consecutive week of outflows on 16 August — the longest streak since January 2018, according to data from CoinShares.
Where other exchanges such as Binance list hundreds of crypto tokens, Bitstamp supports around 30 coins on its platform.
“This is not a race to quantity, this is a race to quality,” said Sawyer. “We’re launching at the moment about four to six assets a month — that’s very comfortable out of the 7,500 that are out there, and that’s a lot more than we did two years ago.”
Cryptocurrency brokers and exchanges have been under intense global regulatory scrutiny this year, as adoption of digital assets skyrocketed. Recent attention has largely focused on Binance over its offering of regulated products such as derivatives and stock tokens, with warnings posted against a variety of the firm’s operations in the UK, Japan, Germany, Italy, Hong Kong and elsewhere.
The UK’s Financial Conduct Authority said earlier this year that it was concerned that most consumers do not fully comprehend the risks of investing in cryptocurrencies. A survey in January found that only 10% of Brits who had heard of cryptocurrencies had seen the regulator’s crypto risk warnings on its website, though some 2.3 million people had bought tokens at the time.
“We want to ensure that customers understand what these tokens are, as opposed to just buying them because they’ve been listed on the exchange,” Sawyer added.
“There are probably a lot of consumers who have gone to other exchanges and bought tokens when they don’t understand the use case, the opportunities and the risks. If you’ve got a billionaire making one tweet and suddenly the fundamental value of that [token] has completely changed, that is not a good place to put your investments.”
Source: fnlondon.com
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