NASDAQ-listed Eqonex exits ‘crowded crypto exchange space’ and focuses on custody
After over two years of operating an exchange, Eqonex (NASDAQ: EQOS ) has called it a day and is set to shut down the exchange portion of its business in a week’s time.
Eqonex, which is also active in asset management and custody, announced this week that it was cutting some aspects of its business to focus primarily on areas where it sees the greatest potential for revenue growth.
“The company will proactively exit the crowded crypto exchange space by closing the exchange,” it said.
Commenting on the closure, Chairman Chi-Won Yoon said the company is keen to focus on businesses where it has significant competitive edge and where its traditional financial expertise can give it a leg up.
“The decision by the EQONEX board to accelerate its strategic plan and close the exchange is in line with this strategic framework,” commented Yoon.
When Eqonex launched its stock exchange, the industry experienced rapid growth. This growth has slowed, and it is not made better by the fact that there are hundreds of exchanges today that “share comparable features. Intense market competition and low margins.” This, combined with the expensive technology required to run an exchange, makes running the business unprofitable.
Eqonex will now focus on asset management, and among these is Bletchley Park, a fund of digital asset hedge funds. The firm also recently launched a BTC exchange-traded note on the Deutsche Börse XETRA Exchange.
The company’s custody business, known as Digivault, has also grown in recent years, Eqonex said. It is set to become the first custodian in the digital asset industry to be licensed by the UK’s Financial Conduct Authority.
“Closing the exchange will significantly simplify our business, narrow our focus, free up resources and allow us to operate as a more efficient organization with the capacity to aggressively pursue market segments that offer the most potential,” commented CEO Jonathan Farnell.
And while it is chasing licensing for its UK custody business, it got into the FCA’s bad books earlier this year because of its connection with Binance. After the FCA booted Binance out of the UK, the exchange found a backdoor into the country (not for the first time) by investing in Eqonex, a transaction that caused major concern for the regulator.
See: BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investment
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