Risk Control: The Survival Strategy of Digital Currency Trading Platforms

The concept of risk originates from Italian, initially referring to objective dangers in nature. However, in today's society, risk is more of a choice, depending on our degree of freedom.

Financial historian Peter Burns points out in his writings that whether it is the rise and fall of enterprises, fluctuations in the stock market, or economic crises, they will appear periodically, but often come when people are caught off guard.

As a digital currency trading exchange and liquidity provider in the market, risk control is particularly important. These platforms integrate various functions such as asset custody, trade matching, and clearing, making them a financial hub.

Industry professionals generally believe that there is insufficient risk control awareness in the blockchain industry, which has led to incidents such as the closure or theft of some platforms. How to effectively implement risk control has become an important topic of concern in the industry.

The digital currency market faces various risks, including policy risk, technological risk, operational risk, and liquidity risk. The risk control department is closely connected with various aspects of the exchange, monitoring various risk indicators.

However, the risk control during the rapid development phase may also restrict the speed of development. Many industry insiders have stated that the risk control awareness and measures of many small and medium-sized platforms are still lacking.

Asset security is the core goal of risk control. In 2019, the total value of stolen assets on digital currency platforms reached $283 million. To address this, some platforms have implemented measures such as the separation of hot and cold wallets and the establishment of user protection funds.

Custodial storage is regarded as an important method to ensure asset security. Some experts suggest that small and medium-sized enterprises consider introducing third-party custodial services or purchasing insurance. Additionally, increasing transparency can also help reduce moral hazard.

Compliance is another major challenge faced by digital currency platforms. Many platforms have established compliance risk control systems covering pre-emptive, ongoing, and post-event measures, including KYC/AML systems and applying for licenses.

Technical security is equally crucial. Even leading platforms have been subjected to DDoS attacks. Various platforms are building technical defenses such as quantitative monitoring, automated hedging, and big data risk control.

Internal risk control cannot be ignored. According to statistics, nearly 2/3 of cybersecurity issues originate from internal employees. Platforms generally emphasize measures such as process standardization, access management, and regular audits. Some platforms also conduct special training such as "internal phishing."

Industry insiders believe that the risk control requirements in the digital currency market may be higher than those in traditional finance. They call for strengthened on-chain information analysis and the establishment of a more comprehensive risk control system. Some opinions suggest that trading and assets should be separated, with different entities responsible for them.

Research shows that digital currency trading platforms allocate an average of 13% of their workforce and 17% of their budget to security measures. Considering the profitability and development prospects of the industry, platforms may need to further increase their investment in risk control.

As an industry insider said, investing in risk control can be seen as an opportunity cost. Companies that value long-term interests will naturally pay more attention to the safety of customer assets.