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    3. Historic Cleanup of the Cryptocurrency Industry Changes the Game in the Market

    Historic Cleanup of the Cryptocurrency Industry Changes the Game in the Market

    By: rootdata|2026/08/10 04:45:00
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    The cleanup of the cryptocurrency industry has become one of the main events of 2026: after several years of rapid growth, nearly 100 projects and platforms have closed, gone bankrupt, or effectively ceased operations, and the market is increasingly shifting from a race for hype to a struggle for sustainability, licenses, and investor trust.

    The Market Enters a Phase of Harsh Restructuring

    Simon Dedich, founder and CEO of Moonrock Capital, believes that the mass exit of cryptocurrency platforms from the market has revealed a systemic problem. According to him, the previous profit model was too dependent on a constant influx of new participants and failed to create an environment for long-term growth.

    <<The current monetization model has a fatal flaw: it constantly needs a new wave of victims, while it lacks a full-fledged ecosystem for sustainable development.>>

    This assessment well explains the scale of closures that swept the global market in the first half of 2026. According to RootData, by the end of July, about 100 cryptocurrency projects and platforms had halted operations, declared bankruptcy, or transitioned to inactive status.

    The wave affected not only small startups. BitMEX, one of the oldest global Bitcoin derivatives exchanges, announced its complete closure effective September 23 following a conducted audit.

    Dedich emphasizes: the problem for many companies is not just one unsuccessful cycle, but the very logic of the business. When growth relies on a constant influx of fresh capital, any pause in funding quickly turns into a crisis. The cryptocurrency market is maturing, and the previous bet on hype no longer works.

    What Liquidation of a Cryptocurrency Project Means

    In this context, the liquidation of a cryptocurrency usually means not the disappearance of the coin from the blockchain, but the cessation of operations of the project, token, exchange, or service. The reasons are most often related to financial problems, regulatory pressure, and lack of liquidity.

    • Bankruptcy: the team or platform runs out of money for operational activities and debt payments.
    • Regulatory requirements: the company does not obtain a license or cannot comply with new rules.
    • Lack of liquidity: users and investors leave, making it impossible to maintain trading and products.
    • Loss of trust: after failures, audits, or security issues, it becomes harder for the project to attract capital.

    Investments Are No Longer Given for Quick Growth

    Analysts link the current wave of closures to a sharp change in the approach of venture funds. In 2020-2022, money actively flowed into new blockchain projects, and the main argument was often audience growth, a loud idea, and promises of scaling.

    Since 2025, the criteria have become stricter. Now investors primarily look at whether the project can:

    • show revenue;
    • generate cash flow;
    • prove the viability of the business model.

    A beautiful token, a loud roadmap, or a rapidly growing community is no longer enough.

    For a sector where finance has long developed faster than the rules, this has been a painful turnaround. Even online digital currency exchange services are now evaluated not only by transaction speed and the number of clients but also by the quality of internal controls, asset security, and process transparency.

    Against this backdrop, attitudes towards user scenarios are also changing. If previously speculative trades and instant bank transactions between fiat and digital assets attracted attention, now market participants increasingly talk about profitability, real demand, and the ability to withstand regulatory pressure.

    Regulation has become the main filter for the industry.

    The most serious consequences for the sector are related to the legal environment. As of July 1, 2026, the transitional period for the European regulation on crypto-assets markets, MiCA, will end. Companies that have not obtained a license must cease providing services or prepare for an organized exit from the market.

    The European Securities and Markets Authority (ESMA) requires that unregistered platforms protect client interests during the shutdown. Before the full launch of MiCA, less than one-fifth of the more than 1,200 crypto companies registered in the European Union had operational licenses.

    According to the Financial Times, by early July, about 244 companies retained the right to continue operations. More than 1,700 others were forced to halt activities or leave the market.

    Key figures of the restructuring look like this:

    • By the end of July: about 100 projects and platforms closed, went bankrupt, or became inactive.
    • By early July: approximately 244 companies retained the right to continue operations.
    • After the launch of MiCA: more than 1,700 companies halted activities or left the market.

    Now, compliance costs are becoming not a burden but a competitive advantage. Previously, companies competed on the speed of product launches and user acquisition rates. Now, the focus shifts to:

    • capital;
    • corporate governance;
    • anti-money laundering;
    • protection of client assets;
    • cybersecurity.

    This is particularly noticeable in segments where blockchain, payments, and decentralized financial services intersect. Projects must prove that they can operate not only during market growth but also under the pressure of audits, reporting requirements, and risk control, including operations in USD.

    "Dirty" Cryptocurrency, AML, and Risks for Users

    "Dirty" cryptocurrency refers to digital assets associated with fraud, hacks, thefts, or money laundering. Such coins and tokens are tracked through blockchain analysis: checking transfer chains, sender and receiver addresses, connections to suspicious wallets, and data from specialized AML services.

    AML in cryptocurrency is a set of Anti-Money Laundering procedures aimed at combating money laundering. In practice, it includes customer verification, wallet risk assessment, transaction analysis, and monitoring operations that appear suspicious to an exchange or payment service.

    It is better to check the cleanliness of cryptocurrency before a large transfer. For this, AML services are used, transaction history is reviewed, and the reputation of the counterparty is assessed. If the asset is found to be associated with high risk, it is safer not to transfer it further, to keep transaction hashes, and to contact the support of the platform through which the operation was conducted.

    "Cleaning" cryptocurrency often refers to attempts to hide the origin of funds. The legal path is built not on masking the trail but on confirming the source of assets, passing KYC and AML checks, returning disputed transfers, or freezing operations until the matter is resolved. Illegal schemes like mixers, P2P exchange chains, and anonymous coins increase the risk of account blocking, loss of access to funds, and legal claims.

    Operations with "Dirty" cryptocurrency can lead to financial and legal consequences: an exchange can block an account, a service can freeze a transfer, and a bank or payment platform can request the origin of funds.

    How to Reduce the Risk of Cryptocurrency Fraud

    Against the backdrop of tightening regulations, investors must pay closer attention not only to profitability but also to basic security. The most common threats remain simple and widespread:

    • Phishing and fake wallet or exchange websites;
    • Scam projects promising quick profits;
    • Ponzi schemes where payouts to old participants come from new ones;
    • Hacks of exchanges and asset storage services.

    Reducing risk is aided by cold wallets for long-term storage, two-factor authentication, checking the team and tokenomics of the project, as well as caution with services that promise returns without a clear source of profit.

    -- Price

    --

    Quality and Liquidity Take Center Stage

    Matt Hougan, Chief Investment Officer of Bitwise Asset Management, believes that the market is entering a new cycle where quality is becoming more important than quantity. Institutional investors are no longer eager to jump into rapidly growing projects at any cost. They are interested in companies with clear revenue, transparent management, and a willingness to comply with legal standards.

    ESMA also insists: unlicensed platforms should exit the market according to a clear plan to reduce risks for investors and maintain the stability of the entire market infrastructure.

    Analysts expect a wave of mergers and acquisitions to continue in the coming years. Small teams with strong technologies but limited capital may become targets for larger players. Projects that have only relied on speculative interest will increasingly face the inability to survive.

    Ran Neuner, CEO of Crypto Banter, describes the current situation as a prolonged process of market cleansing. According to him, the bottom is not formed all at once: weak participants leave, while strong ones get a chance to occupy more space.

    <<The bottom is a process. During this process, the market is cleansed, and only the strongest survive. In the next cycle, licensed exchanges and institutional cash flows will dominate.>>

    A likely scenario is market consolidation: licensed platforms will attract liquidity and institutional flows, while small teams will either join larger ecosystems or exit the market.

    Thus, the crypto market is transitioning into a more mature phase. The winners will not be the loudest projects, but those who can manage liquidity, adhere to rules, and build a business capable of withstanding not only growth but also a prolonged test of strength.


    This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.

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    Contents

    The Market Enters a Phase of Harsh Restructuring
    What Liquidation of a Cryptocurrency Project Means
    Investments Are No Longer Given for Quick Growth
    COIN
    Quality and Liquidity Take Center Stage

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