In the past few days, the well-known and established cryptocurrency exchange BitMEX announced that it will soon be offline and will no longer accept new user registrations.
This news sparked a wave of lamentation online.
Many people are not only feeling sorrow about BitMEX's closure but are perhaps even more nostalgic for the "glorious" and "turbulent" times they experienced in the past.
An online article (see the reference link at the end) provides a detailed overview of BitMEX's journey from obscurity to brilliance, and now to the fading of its glory. This journey not only outlines the history of the exchange itself but also reflects the profound impact of regulatory intervention on the entire cryptocurrency ecosystem.
I have never used this exchange, but its name has always been resounding. In early news reports, we often heard about the liquidation cases and tragic events associated with this exchange.
Its innovative perpetual contracts coupled with astonishing high leverage created an "unparalleled" gambling tool for countless "gold diggers" during the incredibly wild era from 2017 to 2019 — the efficiency and intensity of which made real casinos and other competitors at that time pale in comparison.
Due to its own innovation and the opportunities of the era, along with the lack of regulation at that time, this gambling tool attracted a massive influx of users as soon as it was born, contributing to its high point in the cryptocurrency ecosystem and the astounding wealth of its founders.
However, achievements attained in a situation of regulatory absence are ultimately unsustainable.
I have always believed that in the cryptocurrency ecosystem, there are only two ways to sustain long-term development:
One is to achieve complete decentralization in operation, eliminating single points of failure and human interference as much as possible.
The second is to be completely integrated into regulation, subjecting apparently human-interference-prone pseudo-decentralized projects to regulatory oversight similar to traditional centralized systems.
Aside from these, any ambiguous path is ultimately a dead end.
Since BitMEX is a centralized exchange, its path to long-term sustainable development must align with regulation and must solidly cooperate with regulatory requirements.
However, once integrated into regulation, many of its exaggerated practices will no longer be viable, and many opaque operations will have to be exposed and scrutinized. If it cannot withstand the scrutiny of regulation, the project will likely head downhill.
BitMEX ultimately found itself where it is today due to the strong intervention of regulation, failing to pass the compliance review and gradually losing its market presence.
I took a look at the current top five CEX by perpetual contract trading volume. Among them, although a few CEX have reached a compromise with the U.S. or European governments and faced penalties, many actual issues remain unresolved.
Moreover, many more CEX have not even been brought under regulation. And once they are regulated, they will encounter all the same issues that BitMEX faced.
Therefore, I am not optimistic about these CEXs that seem to have astonishing trading volumes but actually operate on the edge of regulation. Because they will inevitably hit a regulatory wall in the future.
And once they are forced to confront regulation, their future will likely resemble BitMEX, gradually fading away; or they will strictly adhere to regulatory guidelines and be forced to significantly reduce their user base.
Regardless of the path they take, it will be difficult for them to replicate the explosive growth and brilliance in perpetual contract trading in the future.
This is also why I tend to avoid trading activities that these CEXs, which are quite wary of regulation, openly support.
Reference link:
https://x.com/OdailyChina/status/2080214694984388993?s=20
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