Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Why Are Crypto Exchanges Shutting Down in 2026?
July 27, 2026 | NCFA Insight | Digital Assets Blockchain And Tokenization, Competition And Market Structure, Risk Compliance And Regtech
Three Closures Reveal More Than A Bear Market
On July 26, 2026, BitMart began winding down its trading platform. Three days earlier, BitMEX announced its closure after eleven years. AscendEX had already stopped operating on July 1.
Three exchange closures announced or underway inside one month deserve more than a roundup. They raise a harder question around the 2026 bear market. Is it breaking the centralized exchange model, or exposing platforms that had already lost the trading activity, regulatory access or financial capacity needed to keep going?
The public record doesn't support one cause for all three.
- AscendEX tied its closure to the European Union's Markets in Crypto Assets Regulation, along with financial and operating pressures
- BitMart cited its operating conditions, the market environment and future strategy without naming a specific financial or regulatory event
- BitMEX said its board acted after a strategic review and separately stated that assets exceeded liabilities. Their timing is shared, but their disclosed circumstances aren't
Lower Volume Hits Unevenly
The bear market is real, and it strikes at the first line of exchange economics. Trading fees rise and fall with activity. CoinGecko found that spot volume across the ten largest centralized exchanges fell 39.1% in the first quarter of 2026. Its second quarter report recorded a further 27.9% decline to US$1.95 trillion. Perpetual futures held up better, although volume still fell 10% from the prior quarter.
The numbers explain the pressure. They don't explain which exchange closes. The declines among leading spot venues ranged from 5% to 56% in the second quarter, while Binance increased its share to 38.7%. A weak market can therefore strengthen the largest venue at the same time it makes a smaller one uneconomic.
BitMEX is the clearest example. It created the perpetual swap product that became central to crypto trading, yet product invention didn't preserve its liquidity. Kaiko data reported by Reuters put BitMEX below 0.01% market share with roughly US$400,000 in daily volume when the closure was announced. Meanwhile, the ten largest centralized perpetual exchanges still processed US$12.7 trillion in the second quarter. The market BitMEX helped create remained huge, while its position inside it had collapsed.
Liquidity has its own impact. Traders prefer deeper order books, tighter spreads and reliable execution. Market makers follow trading activity, then their capital improves execution and attracts more traders. Once that cycle runs in reverse, adding another token, staking programme or interface may not repair the core business.
Licensing And Onchain Trading Tighten The Squeeze
Regulation is decisive when it controls market access. Under the MiCA transition rule, a crypto asset service provider that wasn't authorized by the applicable deadline had to stop serving the market until it received authorization. That deadline arrived on July 1, the same day AscendEX ceased operations.
Authorization also carries an operating load. MiCA requires prudential safeguards, governance, internal controls, business continuity planning and security documentation. ESMA's current custody review reaches into key storage, transaction controls, incident response and service provider dependencies. The cost continues after authorization because firms need people, systems and capital while trading revenue can fall quickly.
Regulation is therefore a filter and one part of the explanation. It directly affected AscendEX. Neither BitMEX nor BitMart identified licensing as the cause of its closure. Tighter rules can force a decision or raise the cost of staying open, while weak economics determine how much room a platform has to absorb that cost. NCFA's comparison of MiCA and UK rules shows why regulation can favour companies with stronger governance and compliance infrastructure.
Onchain exchanges are also taking a larger piece of derivatives trading. CoinGecko's perpetuals data shows that the top decentralized venues averaged US$611.6 billion in monthly volume during the first four months of 2026, up from US$531.7 billion in 2025. Their share of open interest reached 13.5% by the end of April, compared with 3.6% at the start of 2025.
Still, centralized exchanges held 86.5% of open interest. Onchain competition is meaningful, especially for active derivatives traders, but it hasn't replaced the centralized model. It has given traders another place to go just as a falling market makes every lost account more expensive.
What Founders, Investors And Canadian Platforms Should Watch
The closing notices reveal almost as much through their differences as their similarities.
- AscendEX paused automated withdrawals and said it couldn't assure customers when requests would be completed or how much would be returned
- BitMart set a phased timetable and kept withdrawals open, but its notice didn't disclose revenue, reserves, liabilities or the specific condition that made closure necessary
- BitMEX said assets exceeded liabilities and kept withdrawals available, while warning that thin contracts could be settled early
Customers need clear answers about whether their assets are held separately, whether reserves cover liabilities, how open positions will be priced, how quickly withdrawals will be processed and which legal entity is responsible for returning their money.
For founders, exchange businesses needs deep liquidity, active traders who keep coming back, trusted custody and permission to operate in every market it serves. New products and jurisdictions can bring in more revenue, but they also add capital, compliance, security and support costs. Those costs don't disappear when trading activity goes somewhere else.
Investors should watch market share, order book depth, active trader retention, withdrawal performance, reserve and liability reporting, market maker concentration and the status of key licences. Historical user totals can hide a much weaker current business. BitMEX's decline from an industry pioneer to less than 0.01% market share shows just how far activity can fall before an established name finally exits.
Canada uses a different regulatory framework, but the same operating questions apply. Canadian platform rules cover registration, custody and delivery requirements, while Kraken's registration shows the conditions attached to serving Canadian customers. Registration can strengthen oversight and make the rules clearer. It can't remove market, custody or company risk.
So the answer goes beyond “bear market plus regulatory pressure.” Lower prices and weaker trading cut fee revenue. Licensing determines where an exchange can legally operate. Liquidity keeps concentrating around fewer large venues, while onchain platforms compete for active traders. Custody, compliance and security remain expensive throughout. If an exchange loses trading activity, market access or customer confidence, it can run out of room even when the global crypto market remains very large.
Talking Point
When trading volume falls, which exchange numbers tell you whether a platform is temporarily quieter or losing the liquidity, trust and regulatory access it needs to remain viable?
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