A Roadmap To Rebuild Trust for Crypto Exchanges
True to human nature, it’s hard for investors to trust something that caused them so much pain
Lidiia/Shutterstock modified by Blockworks
Trust in the cryptocurrency industry is at an all-time low. After the demise of the crypto exchange FTX, users withdrew billions of dollars from remaining trading venues causing demand for self-custody solutions to skyrocket. Several months later, investors are still grappling with the reality of witnessing the catastrophic collapse of some of the industry’s biggest trading and lending platforms.
Major players in the space recognize the trust crisis plaguing the cryptocurrency industry and are determining the best way to win back customers’ trust. While conceding that it could take a long time to recover what was lost, the prospect of rebuilding trust remains a top priority for leading firms.
Cryptocurrency exchange platform BingX is one such company at the forefront of rebuilding public trust in the blockchain industry. BingX has taken several significant steps to earn the trust of its users and the broader space. We’ll dive deeper into the ongoing crypto trust crisis and how centralized exchanges can follow BingX’s roadmap to restore the confidence of investors.
Why the trust crisis matters
The fallout of public trust and negative sentiment toward major banks has been a recurring theme in recent decades. Many investors still live with vivid memories of how the collapse of big banks contributed to the 2008-09 financial crisis. The infamous failure of Lehman Brothers and 25 other institutions pushed the banking sector into a trust crisis reminiscent of what the cryptocurrency industry is contending with now. A survey conducted in the UK ten years after the banking crisis found that 66% of adults still do not trust banks.
The cryptocurrency industry could learn from the collapse of big banks that it takes a long time to regain public confidence once it’s lost. The crypto market implosion of 2022, beginning with Terra (LUNA) collapse and ending with the FTX fallout, left a considerable scar on retail and institutional players. Over $1.4 trillion was wiped away from the crypto market in less than twelve months, with millions of investors losing funds to the over 15 major companies that went up in smoke during the period.
Reviewing the magnitude of investor losses makes it unsurprising that the crypto market has struggled to recover from these setbacks. True to human nature, it’s hard for investors to trust something that caused them so much pain.
Industry leaders must do a significant amount of work to restore confidence in the immense potential that cryptocurrency has to disrupt global finance positively. Most importantly, crypto-native companies must prove to outsiders that the industry has implemented lessons from the 2022 crisis to build a more robust and safe ecosystem than ever before.
By rebuilding the trust of previous participants and onboarding new users, crypto technology will remain on the path to mainstream adoption rather than become a niche interest used by true believers.
BingX’s efforts to rebuild trust
BingX is a cryptocurrency exchange platform with advanced functionalities for new and experienced investors. Users can access spot and derivatives trading of digital assets with a user-friendly terminal and support for over 350 cryptocurrencies. The platform also integrates multiple fiat on- and off-ramp solutions, as well as automated investment strategies such as copy trading.
BingX has responded intentionally to the trust crisis plaguing the crypto market. Following FTX’s ignoble demise, BingX was one of the industry’s first exchanges to publish a Merkle Tree-based proof-of-reserves confirming that it held over 100% of customer assets in secure custody solutions. BingX swiftly followed up its publicly verifiable audit with another independent review by Mazars, a highly-rated third-party auditor. Mazars’ audit acknowledged that BingX maintains an average collateralization ratio of 138% for top assets BTC, ETH, USDT and USDC.
BingX’s outstanding reserves reports augment an audit in mid-2022 by leading blockchain security firm, Certik. An intensive review of BingX’s security infrastructure verified that the platform maintains the highest standards for storing user funds.
And these proactive measures have been working. Amid the current bear market, BingX’s user base has grown over 350% with trading volume jumping by 280% during the period. The growth demonstrates that investors are still optimistic about crypto’s future and willing to onboard to the most secure platforms. Moreover, there is renewed interest among investors to back crypto-native companies that support industry recovery efforts and give back to their community in innovative ways.
BingX gives back
BingX has demonstrated over time its commitment to giving back to the crypto industry and the global community. Such generous financial aid goes beyond attracting public favor and goodwill. It exemplifies BingX’s dedication to shape mainstream perception of the digital asset industry positively.
For example, BingX contributed to industry recovery efforts following the FTX saga by introducing a $5 million relief fund for its business partners. The move, which distributed relief for up to six months to eligible partners, provided a cushion to help troubled firms survive through the harshest periods of the ongoing crypto winter.
Meanwhile, BingX is supporting several humanitarian causes through its charity arm. For instance, the cryptocurrency exchange swiftly responded to February’s devastating earthquake in Turkey by donating 1 million Turkish Lira to affected victims.
Existing BingX users are not left out from their efforts to give back to the community either. BingX recently rolled out an industry-first offering to subsidize losses for traders. The new feature provides subsidy vouchers for copy traders, giving them the chance to enter and exit positions with a profit even in rare cases where the market goes against them.
Commenting on why giving back through different initiatives is part of BingX’s DNA, Megan Nyvold, Head of Media acknowledged, “By giving back to the community, we would like to deliver a message to the public: Crypto and finance are not about speculation, selfishness, or winner-takes-all. Instead, it could benefit all people and we want to be part of the great evolution. We give back because we care about our users more than just making money. We are willing to invest to help it grow.”
She continued, “This [giving] can build trust between the platform and the community, which can lead to more support and confidence. We all need to grab all possible opportunities to develop with greater roots and confidence after a tough year, even though it is difficult for the greater crypto community. The key is to enhance acceptance and accountability, connect communities, and ensure safety.”
Crypto’s comeback story lies in rebuilding investor confidence
The cryptocurrency industry faces the daunting challenge of rebuilding public confidence in the technology’s promise following a dire trust crisis. BingX believes that a positive outcome is within reach and is already taking bold measures to address the shortfall.
BingX has carved a path to greater trust through independent client reserves and security audits to boost customers’ confidence in its storage practices. They are also giving back to their user base, crypto ecosystem, and global community to demonstrate their commitment to being a positive influence.
BingX encourages their crypto exchange peers to likewise prioritize trust-building efforts to accelerate the recovery of public trust. While it won’t be easy, they firmly believe these combined efforts will be a worthwhile investment to ensure the long-term sustainability and growth of the entire ecosystem.
This content is sponsored by BingX.
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