Bit.com has announced that they will be winding down operations and urged users to migrate their assets to Matrixport by the end of this month. This situation can create both obstacles and pathways for centralized exchange (CEX) users. Here are my thoughts on this situation.
How is Bit.com shutting down impacting exchanges?
Bit.com announced this gradual shutdown with a final closing date of 31 March 2026. Their closure raises some red flags for other CEXs. Smaller exchanges have been overly reliant on liquidity from Tether, almost as if the firm was backstopping their own liquidity. But, now with the impending liquidation of another exchange, Bit.com, what could this mean for CEXs?
It could spell a tighter liquidity market and, at the same time, send more retail customers elsewhere. CEXs could become more desperate to attract funds. Smaller exchanges will likely start to consolidate, it seems, leaving just the largest and most compliant ones offering services.
A large slice of trading volumes could also get rerouted to other exchanges after the shutdown. Smaller CEXs might also find themselves outsourcing to larger firms to survive. So, not necessarily a good time to be on the exchanges.
What should users do?
Bit.com has recommended to its users to withdraw or migrate their assets with an emphasis on moving to Matrixport. They have suggested that, if you haven't already, this might be worthwhile. For migrating users, all bets are on stablecoins with the knowledge that liquidity will be thin during this transition period.
Act now to ensure you don't lose any funds. Users need to act quickly because this shutdown has the unfortunate potential of attracting scammers who prey on fear and uncertainty.
The recommended course of action is to be mindful of your tokens and to monitor what is being removed. There is also a necessity to rein in any rescues going to your wallet since downsizing loading volumes and liquidity for uni LP, will cause delays in your orders.
What does this mean for regulation?
A situation like Bit.com shutting down would likely receive a great deal of regulatory heat. It opens a window to create stricter regulatory crackdowns. CEXs could face increased scrutiny from Asian and European regulators. They may start looking for other avenues and stopping the trade of other tokens that CEXs are buying.
With additional scrutiny, exchanges may have to increase their reserves to ensure protection and less backlash moving forward. These regulations might also mean that consumers will have more protection regions since CEXs may have increased reserves to account for risks and losses.
What should the exchanges learn from this?
Probably nothing. That's the sad reality. Exchanges like Bit.com and others like it need to realize that while they have users, they will be fine. But when the minute they stop having users, that's when they need to step back.
However, they are unlikely to see the bigger picture. Everyone doing the trades needs to go back to the real world where traditional finance is safer.
