After over two years of operating an exchange, Eqonex (NASDAQ: EQOS) has called it a day and is set to shut down the exchange part of its business in a week’s time.
Eqonex, which is also active in asset management and custodial business, announced this week that it was cutting off some aspects of its business to focus primarily on areas where it sees the most potential for revenue growth.
“The Company will proactively exit the crowded crypto exchange space by closing the Exchange,” it stated.
Commenting on the shutdown, chairman Chi-Won Yoon said that the company is intent on focusing on businesses where it has significant competitive strengths and where its traditional finance expertise can give it a leg up.
“The decision by the EQONEX Board of Directors to accelerate its strategic plan and close the Exchange is in alignment with this strategic framework,” Yoon commented.
When Eqonex launched its exchange, the industry was experiencing rapid growth. This growth has slowed down, and it’s not made any 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 costly technology it takes to run an exchange, makes operating the business unprofitable.
Eqonex will now focus on asset management, chief among these being Bletchley Park, a fund for 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 been growing in recent years, Eqonex said. It’s in line to become the first custody firm in the digital assets industry to become licensed by the U.K.’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 capacity to aggressively go after market segments that offer the most potential,” CEO Jonathan Farnell commented.
And while it’s chasing licensing for its custody business in the U.K., it got in the FCA’s bad books earlier this year over its tie-up with Binance. After the FCA booted Binance out of the U.K., the exchange found a backdoor to the country (not for the first time) by investing in Eqonex, a transaction that caused great concern to the regulator.
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