McGrathNicol says there could ultimately be fewer than 10 digital asset exchanges that have strong corporate governance and operate efficiently.
filed for bankruptcy protection in Singapore, McGrathNicol partner and head of advisory Matt Fehon says the industry is now talking about the start of a 40 to 50 per cent rationalisation.The firm reckons that ultimately there will be fewer than 10 Australian digital asset exchanges that have strong corporate governance, operate efficiently and have not leveraged.
Earlier this month, Chinese-founded Huobi Group registered as a digital currency exchange provider with AUSTRAC.for external audits or IT security standards for crypto exchanges in Australia. Some exchanges are morphing more towards “banks” that offer their own financial-type products to users on their platforms.
McGrathNicol’s Mr Caddy says this kind of leverage and interconnectivity will create a further domino effect across the industry.“Then there will be others that won’t realise what’s happened to them in terms of the deposit of their crypto, but they won’t know what’s happened to it, and whether it’s been leveraged again, or moved on again.”
Now that interest rates are rising and inflation starts to bite, money has flowed out of riskier assets like cryptocurrencies.This outflow, Mr Caddy said, will weaken crypto operators that have not developed risk management strategies or internal systems to cope with a liquidity crunch. “I can’t give you a date or week, but it’s pretty soon,” Mr Feeney said. “Who would you lend to at this moment in time? You would not have a trust in the counterparty in the digital asset space at this point in time.
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