What is the real competitive moat of exchanges? Coinhako gives a different answer with "compliance"

Traffic is still important, but it’s no longer enough.

When exchanges enter the stock era, true competition is just beginning

In recent years, crypto exchanges have tried almost every growth tactic: launching new assets, promotional activities, derivatives, structured products. But as the market cycles through multiple phases, a reality has become clear: The existing user base is fully divided among top platforms, homogeneous competition rapidly compresses margins, and trust costs rise.

More importantly, what can truly elevate market size isn’t frequent trading by existing users, but larger, longer-term shifts in capital structures.

Coinhako Group CEO Yusho Liu mentioned internally about 2025: The industry is entering a new phase, growth no longer comes from sentiment and volatility, but from trust, rules, and long-term allocation needs. That’s why more exchanges are re-evaluating the concept of “moats.”

Traditional capital isn’t unwilling to enter, but lacks a “trust interface”

Regulation is becoming the key channel connecting two worlds.

Crypto market growth comes partly from new users, partly from changes in capital structures. The real ceiling-lifter is often the latter: when more professional investors and institutional funds are willing to participate, trading volume, product complexity, and capital demand all increase.

A frequently discussed but often oversimplified question is: Why hasn’t traditional capital entered crypto markets on a large scale?

The answer is usually straightforward. When traditional funds enter crypto, their primary concerns are not returns, but three things:

● Clear regulatory framework

● Verifiable asset security

● Sustainable platform governance and risk control

Without these “trust interfaces,” exchanges can easily fall into a cycle: the more they rely on short-term traffic, the harder it is to build long-term trust; the less trust they have, the harder it is to attract longer-term capital.

That’s why, in recent years, “compliance” is no longer just a cost for exchanges but increasingly a structural advantage: it determines whether a platform can legally connect to the banking system, handle larger funds, and turn risks from “unverifiable black boxes” into “verifiable processes.”

If trust cannot be established through regulation and systems, an invisible barrier always exists between the two worlds.

Treat compliance as a long-term asset, not just a cost

Coinhako chose a slower, more difficult path

During the rapid expansion of the crypto industry, compliance is often seen as a growth cost. But some exchanges choose to embed it as a fundamental capability, incorporating it into their long-term planning from the start.

Unlike relying on short-term expansion, Coinhako has operated within Singapore’s regulatory framework since its inception, viewing compliance and security as part of the platform’s infrastructure, not just a phase. This means higher standards are required in product design, fund flows, and user onboarding.

Regulatory-wise, Coinhako holds a Major Payment Institution (MPI) license issued by the Monetary Authority of Singapore (MAS), allowing it to provide Digital Payment Token Services and Cross-border Money Transfer Services within a regulated framework, serving local and regional users under compliance. As regulations tighten and industry thresholds rise, this compliance background is crucial for expanding institutional services and cross-border funds.

Compliance isn’t just about licenses. By 2025, Coinhako continued deepening cooperation with Singapore regulators, helping to intercept hundreds of scam cases and strengthening user asset protection mechanisms. The significance is that: User fund security is no longer just an internal risk control, but integrated into a societal risk prevention framework.

This long-term investment has also gained external recognition:

• 4th consecutive year receiving Singapore’s “Outstanding Community Contribution Award for Anti-Scam”
• Awarded “Outstanding Partner” at the 2025 SaferSG National Security Summit
• Nominated for “Virtual Asset Service Provider Compliance Team of the Year” by the Asian Legal Journal for two consecutive years

Coinhako’s compliance head, Glen Chee, was also named “Best Compliance Officer of the Year” for two years running and included in ALB’s “Top 15 Compliance Officers in Asia-Pacific.” Compliance in an exchange isn’t about “braking,” but about providing a long-term growth path that can be scaled.

What do institutions want when the market matures?

As the industry matures, the needs of professional investors are shifting: structured yields, risk management, and long-term allocations are replacing short-term speculation.

In 2025, Coinhako’s institutional business saw significant acceleration:

• Structured product trading volume increased over 450% year-over-year
• Total options trading exceeded $1 billion
• Coinhako Earn, the institutional yield platform, committed assets surpassing $200 million

This shift reflects an upgrade in the role of exchanges: from simple trading gateways to providers of comprehensive digital asset solutions for professional investors.

Beyond trading, the real challenge is “infrastructure”

Clearing, liquidity, and cross-border financial capabilities are becoming the differentiators for exchanges.

If trading matching is the “front end” of crypto finance, then clearing, settlement, and liquidity are the “back-end systems.” They are often overlooked but are the hardest to replicate.

Building these capabilities requires long-term investment and stable organizational collaboration. Coinhako has teams in Singapore and Vietnam focusing on clearing, settlement, risk control, and fund security, with over a hundred staff members adopting a regional operational model. The team mainly comes from renowned tech companies and financial securities sectors, responsible for core system development and maintenance.

Over the past two years, Coinhako has supported over $10 billion in crypto settlements, providing compliant, efficient, and reliable transfer support for the growing institutional client base in Asia-Pacific. Meanwhile, Coinhako continues to serve as a native liquidity provider in multiple key markets and platforms, including TP ICAP Fusion.

As exchanges begin to undertake more fundamental market functions beyond just matching trades, the competitive focus shifts from “features and rates” to “system capabilities and infrastructure depth.”

The next phase for exchanges isn’t just trading

How to evolve from a crypto platform into building financial infrastructure is a key challenge for exchanges.

Looking ahead to 2026, Coinhako will continue investing in three long-term strategies:

• Deepening local regulatory cooperation, continuously strengthening anti-scam and user asset security mechanisms
• Serving more institutional investors with more mature trading and yield solutions
• Connecting more on-chain and off-chain scenarios, building cross-border crypto financial infrastructure

The next growth phase of digital assets isn’t just about trading and yields but about truly integrating into the global payment, settlement, and cross-border capital flow systems.

The moat of exchanges is returning to “trust” itself

As the industry enters a stock competition phase, what’s truly scarce may no longer be faster growth methods but lower trust costs.

Coinhako’s approach may not suit all exchanges, but it offers a clear example: As markets become more institutionalized, compliance, security, and infrastructure are redefining the moat of exchanges.