Cryptoasset market exits: Wind-down lessons before the UK's authorisation gateway opens

In July 2026, three established centralised exchanges, AscendEX, BitMEX and BitMart, announced they were winding down. They are not isolated cases. Industry trackers show more than 100 digital asset firms have exited the market in 2026. 

• AscendEX ceased operations on 1 July 2026 after failing to secure a MiCA licence and losing a key liquidity partnership. Some users may not recover their full balances.
• BitMEX, operated by HDR Global Trading Limited, announced on 23 July 2026 that it would cease operations, with closure scheduled for 23 September 2026. At its 2019 peak the exchange held around 57% of the crypto derivatives market and processed USD 1 trillion in annual volume. By the time of the announcement, it accounted for under 0.01% of the exchange market. At the time of announcement, the company’s self-reported proof of reserves indicated that customer assets would be fully covered.
• BitMart announced on 26 July 2026 that it would wind down its trading platform. Trading ceased on 26 August 2026, with full closure scheduled for 31 January 2027. BitMart subsequently appointed financial advisors to advise on available options and a near-term action plan.

Other recent exits include Gemini's withdrawal from the UK, EU and Australian markets in February 2026 (with EToro appointed as offboarding partner), EXMO's wind-down after being added to the UK's Russian sanctions list, and Luno's exit from Europe to focus on core markets in Africa and South East Asia.

The FCA’s final cryptoasset rules: A step change in regulatory cost

On 30 June 2026, the Financial Conduct Authority (FCA) published final rules for the new regime governing trading platforms, intermediaries, custodians, stablecoin issuers, and firms arranging staking in the UK. It is the most significant regulatory expansion the sector has faced. 

The gateway opens on 30 September 2026 and closes on 28 February 2027, ahead of the full regime taking effect on 25 October 2027. Authorised firms will need to maintain regulatory capital calibrated to their activities, governance and controls and ensure compliance with the incoming regime. They will also need to comply with the Consumer Duty, conduct rules and a dedicated market abuse regime, on top of existing anti-money laundering obligations.

Market conditions challenge business models

Bitcoin fell roughly 33% in the first half of 2026 and Ethereum around 50%. Whilst they have rallied in recent months and volatility has reduced over recent years, it remains an issue. Mid-tier platforms face growing competition from decentralised alternatives, pushing volume towards fewer larger, better-capitalised institutions. BitMEX's fall from a leading share of the derivatives market to under 0.01% illustrates the scale of that shift. 

Firms must weigh the rising cost of authorisation and compliance in each jurisdiction against the revenue it generates Gemini's phased UK exit reflects that calculation. 

Firms that don’t apply, or fail to clear the bar, must wind down their UK cryptoasset business in an orderly way before 25 October 2027.

This summer's exits divide into two very different categories: 

• BitMEX, Gemini and Luno appear to be solvent strategic withdrawals: it seems that the balance sheet supports a full return of client assets, and the exercise is one of sequencing, communication and cost control. 
• AscendEX and EXMO are shortfall situations, where the assets available do not appear to cover obligations to customers. 

A firm that starts planning while it is still solvent helps to maintain optionality. A firm that waits, or has not done sufficient planning in advance, may not.

Lessons from recent wind-downs

The exits map closely onto weaknesses the FCA has already flagged in its wind-down planning reviews in other regulated sub-sectors. Its Wind-Down Planning Guide (FG20/1) sets expectations, and its supervisory work on payments and e-money firms has repeatedly found plans that were untested, unfunded at the point they would actually be needed, and silent on how client money would be returned. Cryptoasset firms should expect the same scrutiny.

Withdrawal capacity: Firms can be unprepared for the volume a closure announcement generates. One measurement of BitMart's public interface on 22 August recorded only 38.8% of coin-network combinations as withdrawable, four days before its stated deadline. 

Client asset location: When assets held with custodians, banks and payment providers are frozen, there is often no practical route to recover them, as AscendEX customers have found. 

Legal title: Two questions decide how quickly customers are paid, and both need answering before a closure announcement: can the firm reconcile individual entitlements to on-chain and off-chain holdings, and are customer assets held on trust or on the firm's own balance sheet? Following the Property (Digital Assets etc.) Act 2025 and Ruscoe v Cryptopia, cryptoassets can be held in trust, but only if terms of business and operational segregation actually achieve it.

Shortfall in customer funds: EXMO disclosed that 29.4% of its total obligations to users cannot currently be returned, attributed to unrecovered funds from a 2020 hack and fresh freezes imposed following the May 2026 sanctions. Rising crypto prices kept the value of the shortfall growing relative to EXMO's obligations. EXMO applied the haircut proportionally across every client balance and credited the deducted amount as a non-tradable claim token (USDRecover), but this was a decision taken under pressure, not a methodology agreed in advance.

Lack of wind-down triggers: AscendEX's reserves were visibly deteriorating for weeks before its announcement, with no evidence a defined trigger had been monitored. Over USD 240 million left its wallets on 20 June alone, and by early July reserves had fallen to USD 13.5 million, most of it illiquid tokens.

Key management and operational continuity: If the people who hold or can authorise private keys leave, the assets may become unrecoverable. Several BitMEX senior leaders departed in the weeks before its announcement. Wind-down plans need named signatories, tested key-recovery procedures, retention arrangements, and continuity of the third-party dependencies needed to return assets to customers. Records matter too: customers need transaction histories to substantiate claims, and those can disappear when a platform goes dark.

Scam risk during wind-down: BitMart has had to repeatedly warn customers about parties offering to expedite withdrawals for a fee. Closure announcements reliably attract fraud, and few wind-down plans anticipate it. 

Why winding down properly matters

With the authorisation gateway opening on 30 September 2026, the quality of a firm's wind-down capability is about to attract far more attention. A controlled wind-down determines whether customers get their assets back and whether value is preserved or destroyed. A poor one can result in frozen balances, unclear timelines and consumer harm, precisely what the FCA's requirements are designed to prevent.

Volatility also makes timing a question of value, not just process. Where there is a shortfall, the date on which claims are valued and converted materially changes what each customer recovers, and a rising market can widen a shortfall expressed as a percentage of obligations, as appears to have happened at EXMO. Agreeing a valuation and distribution methodology in advance is far easier than doing so after an announcement. 

Once a firm faces a real prospect of insolvency, directors' duties shift from promoting the success of the company towards the interests of creditors, and continuing to trade past the point where there is no reasonable prospect of avoiding insolvent liquidation carries personal exposure for directors. 

Five questions a board should be able to answer now

1. If a decision to exit operations were taken tomorrow, could you reconcile every customer's entitlement to the assets you hold?
2. Are customer assets held on trust, and would your terms of business and operational segregation withstand scrutiny?
3. What are the defined wind-down triggers, who monitors them, and when were they last tested?
4. Is the wind-down funded at the point it would be needed, once revenue has fallen away?
5. If your key holders left this month, could anyone else access the assets?

How we can help

Our team has hands-on experience planning for and winding down financial services firms, including exchanges and digital asset providers. We work with firms at every stage, from wind-down planning through to full insolvency appointments, helping directors evidence that decisions were taken on a timely and defensible basis. For firms weighing the FCA's authorisation gateway, we can help assess wind-down readiness now.

That readiness isn’t a post-authorisation task. A credible, funded and tested wind-down plan is part of demonstrating suitability as an applicant. The gateway cuts both ways: firms that apply need a plan the FCA finds convincing, and firms that don’t apply, or that are refused, need to have executed one before 25 October 2027. With applications due between 30 September 2026 and 28 February 2027, both timetables run concurrently, and the wind-down is the harder to compress. 

We will look at the authorisation gateway and the FCA's wind-down plan expectations in more detail in a separate forthcoming article.

For more information, contact Russell Simpson or Carmel King.