Users haven’t abandoned crypto exchanges post-FTX

#Web3Weekly: Feb. 19–25, 2023

Peter A. McKay
The Modern Scientist
3 min readFeb 26


This post is adapted from the latest edition of my newsletter #Web3Weekly. If you would like to receive it in your inbox every Sunday, subscribe here.

Exchanges are still a crucial cog in the crypto market, even after the meltdown of FTX late last year.

Consider: Coinbase reported solid quarterly earnings report on Tuesday. It’s also in talks with the New York Stock Exchange’s parent company to create a new fully reuglated crypto marketplace. Meanwhile, cometitor Binance is looking to gobble up $1 billion in assets from of bankrupt lender Voyager.

Regulators are objecting to that bid. But you get the point: These platforms are looking to expand right now, not fading into the background due to any seismic post-FTX shift in customer behavior.

Blockchain purists see FTX’s meltdown as a cautionary tale to avoid the worst sins of traditional finance. They argue that that the whole point of tokenization is for users to have increased control over their assets, without interference by middlemen.

In this view, letting any exchange maintain custody of your crypto wallet, including possession of the encryption keys, just defeats the whole purpose.

However, many non-technical users clearly have a different perspective. For them, exchanges offer user-friendly interfaces and less hassle than cold storage of their tokens. Thus the exchanges remain an attractive option for these users, in a trade-off of convenience for more high-minded values that’s common elsewhere in tech.

For instance, you can point out until you’re blue in the face that iPhones and laptops are made under brutal working conditions in China. But how many users will actually ditch their devices or shift their purchasing decisions because of it? Vanishingly few.

The week’s other notable headlines:

  • The global crypto market has recently seen inflows of $4.5 billion in new investment per month. The buying spree reverses a trend that lasted through most of 2022 in which investors were exiting crypto, according to the research firm Glassnode.
  • Prosecutors added new criminal charges of bank fraud and licensing violations to their case against FTX founder Sam Bankman-Fried. Ouch.
  • USDC issuer Circle is planning an aggressive expansion, including a 25% increase in employee headcount.
  • Decrypt published a timely explainer about what stablecoins are and how they work.
  • Polygon Labs cut nearly 1,000 jobs, or 20% of its staff.
  • New data from Artemis suggests that developer activity on crypto projects has continued to grow in early 2023.
  • Wall Street hates Silvergate now. Moody’s downgraded the crypto firm’s credit ratings, and its stock is the single most shorted issue on the U.S. market.
  • Spotify has begun testing token-enabled playlists. The feature allows users to access music using non-fungible tokens.
  • The American Metaverse Awards unveiled its nominee shortlist for categories recognizing top venture capitalists, blockchain development service providers, ad agencies, and other aspects of augmented and virtual realities. Winners will be announced at the group’s conference March 29–30 in Miami.

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Best wishes for a healthy and productive week ahead.



Peter A. McKay
The Modern Scientist

I publish the newsletter #Web3Weekly. Former Head of Content & Writer Development at Capsule Social. Other priors: WSJ, Washington Post, and Vice News.