Reuters - Crypto investors step up risk management after last year's meltdowns

Cryptocurrency investors have grown more cautious about who they do business with, after being burned last year

by Elizabeth Howcroft

• Crypto investors fear another FTX-style blow-up

• Traders move to third-party custodians

• Due diligence more rigorous, traders say

Sudden collapses of Celsius Network, Voyager Digital, FTX and others, and fearing a regulatory crackdown will put more pressure on remaining firms. The recent crypto platform bankruptcies trapped customer assets now worth around $34 billion, according to Xclaim, which allows creditors to trade such claims.

To protect themselves, institutional crypto investors are switching to exchanges that offer stronger asset protection, boosting due diligence on trading partners, and executing trades in smaller chunks, among other new risk management measures, according to executives and industry data.

"Investors in this asset class have learned their lessons the hard way and now are being much much more picky about who to deal with," said Samed Bouaynaya, a digital asset portfolio manager at London-based hedge fund Altana Wealth.

Binance.US and Coinbase Globa are the latest crypto exchanges to come under scrutiny after the U.S. Securities and Exchange Commission (SEC) sued the pair for allegedly breaching its rules, and industry executives expect more enforcement actions. Binance and Coinbase deny the regulator's allegations.

Altana now prioritizes exchanges that allow it to settle and hold its assets with independent third-party custodians such as the UK's Copper and U.S.-based Fireblocks. Because Binance does not give Altana that option, the hedge fund rarely leaves balances at Binance overnight, said Bouaynaya…

You can read the full report here