Author: Nancy, PANews

The crypto market is rapidly moving away from its chaotic expansion phase, with accelerated regulation marking a turning point in the industry's transition to compliance. Former crypto players are donning suits and taking to the negotiating table of the mainstream world as a more professional force.

At the same time, the two-way convergence between the traditional and crypto worlds is accelerating significantly. On the one hand, traditional institutions are actively entering the crypto arena, including tokenization, stablecoins, and on-chain payments. On the other hand, the crypto industry is also proactively embracing TradFi assets such as stocks and precious metals, promoting the further integration of on-chain and off-chain finance.

It's fair to say that crypto is entering its mainstream era. As the market expands and liquidity increases, the development and competitive logic of crypto CEXs (centralized exchanges) are changing. Compliance is evolving from a bonus to an entry requirement, and is gradually becoming a watershed moment for industry differentiation.

Major upgrade in crypto regulation; TradFi is accelerating its entry into the market.

Liquidity from traditional finance continues to flow into the crypto world. As crypto continues to expand the boundaries of TradeFi assets and drive financial model innovation, the industry is gaining increasing recognition and participation from mainstream capital, and the scale of multiple sub-sectors is also expanding.

Even as the crypto market remains in a bear market cycle, these once-fringe financial experiments continue to break records in scale and are gradually evolving into part of the new global finance. This is largely due to the clearer and more predictable compliance environment brought about by the ongoing upgrades in crypto regulation.

After years of protracted negotiations and hundreds of enforcement actions, global crypto regulation is transitioning to a new regulatory cycle with clearer rules and more defined boundaries. Over the past two years, major countries and regions such as the United States, the European Union, Singapore, Hong Kong, and South Korea have accelerated the implementation of crypto regulations. 2026 is widely regarded as a crucial year for the transition from legislation to implementation.

For the crypto industry, increased regulation will not only boost market confidence but also clear obstacles for traditional institutions to enter the market on a large scale, thereby propelling crypto from the periphery to the mainstream.

The mainstream era has arrived; compliance is no longer just an option.

As the crypto industry begins to enter a new, more certain cycle, this means the rules of the game are changing.

Currently, CEXs are gradually transforming from single trading platforms into comprehensive financial platforms. More and more exchanges are launching TradeFi-related products to expand their business lines, thereby enhancing user retention and revenue diversification capabilities, and competing for a larger market share and greater industry influence in the mainstream market.

In this transformation process, compliance is no longer just an option. In the past, CEX license applications were mostly to meet regulatory filing requirements, but with the accelerated implementation of global crypto regulations, licenses have become a necessary threshold for CEXs to expand their business, enter mainstream markets, achieve global expansion, and strengthen user trust. It not only unlocks the deployment of more TradeFi products, but also directly affects institutional entry, user stickiness, and valuation premiums.

Currently, obtaining licenses mainly falls into two categories. One is the acquisition-based model, exemplified by exchanges like Coinbase and Kraken. This model offers rapid access, immediately acquiring the target company's licenses, customer base, and technology, but requires significant upfront investment, carries integration risks, and is heavily reliant on the quality of the acquired target. The other is the direct application model, represented by exchanges like Binance, OKX, and Gate. This model offers greater autonomy, allows for customization of services based on individual business needs, and boasts better long-term compliance and reputation, but involves a longer processing time, higher costs, and some uncertainty in the approval process.

In fact, the statistics above show that a global licensing network is becoming an essential asset for mainstream exchanges and is gradually becoming one of their core competitive advantages. Compared to the earlier model of relying on a single offshore entity for operation, more exchanges are now establishing independent operating entities in different countries and regions and proactively applying for local regulatory licenses. This compliance approach can reduce the systemic risks brought about by policy changes in a single jurisdiction, while also allowing for more flexible adaptation to the ever-changing global regulatory environment.

In terms of the number of licenses, various exchanges have actively established relatively extensive compliance networks globally. Binance and Gate have been particularly proactive in their compliance efforts, possessing a relatively ample reserve of licenses and demonstrating a strong long-term operational strategy. In contrast, Coinbase, Kraken, and OKX are focusing their efforts on key regions.

In terms of geographical coverage, most mainstream centralized exchanges (CEXs) currently demonstrate strong global compliance capabilities. Binance and Kraken, in particular, have a wider geographical reach, thanks to their large user base and flexible multi-country expansion strategies. However, some exchanges, in addition to competing in highly regulated and high-barrier markets such as the US, Europe, and Japan, are also actively expanding into emerging markets such as the Middle East, Latin America, Southeast Asia, Australia, and Africa to capture more incremental users and market opportunities.

For example, Gate's licenses belong to various local entities: in the United States, it holds 35 state-level MTL licenses, enabling compliant operations in 46 jurisdictions; in the European Union, it leverages its Cyprus CySEC license, MiCA license, and Payment Institution (PI) license to cultivate the European market; in Japan, it enters a market with high barriers to entry with its FSA license; in the Middle East, it uses its Dubai VARA license to penetrate rapidly emerging regions; and in Australia, it completes its layout through AUSTRAC registration.

However, simply comparing the number of licenses a CEX holds doesn't fully reflect its compliance capabilities; the value of those licenses is more crucial. For example, Gate Group prioritizes compliance in global crypto funding hubs, and its various entities currently hold licenses such as the US MTL, Japan FSA, Dubai VARA, and EU MiCA—all core licenses with high global recognition and stringent review standards. From this perspective, the more high-level regulatory licenses a CEX obtains, the stronger its international competitiveness and market trust in terms of fund security, risk control, compliant operations, and long-term sustainable development capabilities.

However, with the successive issuance of these different types of compliance licenses, not only has the global business compliance of exchanges been further improved, but it has also provided more possibilities for them to expand their business lines such as derivatives, payments, custody, and institutional services, opening up new market space and user growth potential. For example, Gate Group's Malta license supports crypto exchange, order execution, custody, transfer, and payment services; while its Cyprus license covers investment advisory, asset management, custody, and currency exchange.

A new round of survival battles has begun, with compliance becoming the key to victory.

The ongoing escalation of crypto regulations is, to some extent, pushing cryptocurrencies back into the regulatory framework of traditional finance. For centralized exchanges (CEXs), licenses have become a key competitive advantage in the new round of competition.

In the past, the crypto industry relied on regulatory arbitrage for expansion. Platforms often prioritized establishing themselves in regions with lax regulations and then provided services to global users through offshore entities. This approach once brought rapid growth advantages but also led to the crypto industry's unchecked growth.

However, the space for this logic to survive is being rapidly compressed. On the one hand, countries around the world are accelerating the establishment and improvement of regulatory frameworks; on the other hand, TradeFi participants generally regard compliance capability as a core prerequisite when entering the crypto market. Furthermore, for crypto platforms, compliance is not only related to the continued operation of their business, but also directly affects whether their products can gain mainstream users and funding, as well as regulatory approval.

For CEXs, compliance has transformed from a cost center into a survival threshold, and even a decisive factor in competition. Obtaining a license is essentially a long-term, high-investment, systemic project.

Some major exchanges initiated their global compliance efforts relatively early. For example, as early as 2018, when the crypto industry was still in its early, unregulated growth phase, Gate.cn had already begun its global compliance strategy, submitting relevant license applications in Malta and obtaining local compliant custody and trading licenses in 2022. Since then, Gate.cn has continued to accelerate its global compliance expansion. To some extent, this reflects its early anticipation of regulatory trends and its long-term investment and strategic planning in building a compliance system.

By 2025, Gate's global compliance strategy had accelerated further, marking its most intensive year of license acquisitions. In the United States, it had obtained 35 state-level compliance licenses, covering 46 jurisdictions and enabling it to provide legal compliance services in most parts of the country. In Europe, it had the capability to conduct compliant operations in more than 20 countries. Simultaneously, it continued to obtain relevant licenses in Australia, Japan, and other countries and regions, further expanding its global regulatory footprint.

Obtaining high-quality licenses is even more stringent, often requiring months or even longer, a total cost of hundreds of thousands to millions of dollars, and continuous compliance adjustments. This undoubtedly tests a platform's time, capital, and resilience. Such long-term, systematic investment places high demands on a platform's resource allocation capabilities, execution efficiency, and organizational resilience, forming a competitive barrier that is difficult to replicate in the short term and cannot be easily achieved by "buying a license" afterward.

For example, MiCA, as a unified EU regulation, only requires authorization in one member state to expand operations to all 27 EU countries. Therefore, it is considered a golden ticket to entering the mainstream European financial market and is highly sought after by institutions and mainstream banks. However, its high value also means a higher barrier to entry. Typically, the complete application process for MiCA takes approximately 6 to 12 months, with total investment often reaching hundreds of thousands to millions of euros.

Note: Gate Europe CEO Giovanni Cunti met with Maltese Finance Minister Clyde Caruana; the issuance of MiCA licenses accelerates Europe's expansion.

As one of the most representative crypto regulatory frameworks in the Middle East, Dubai's VARA is considered to balance regulatory strength with openness to innovation. It sets high entry barriers for companies applying for VASP licenses, and after obtaining a license, they must continuously accept real-time monitoring, regular audits, and compliance requirements such as segregation of client assets. In recent years, VARA has also issued hefty fines to several unlicensed operating institutions, and even directly ordered them to cease operations, demonstrating its increasing regulatory enforcement. Compared to the European and American markets, VARA's overall application cycle is relatively faster, typically around 4 to 7 months. Leveraging the locational advantages of the Dubai International Financial Centre and its relatively favorable banking, tax, and business environment, VARA is gradually becoming an important entry point for global crypto companies to expand into the Middle Eastern market.

The US state-level MTL (Medium-term Lending License) is considered one of the most complex and costly compliance systems globally. Because the US lacks a unified federal crypto licensing system, crypto institutions typically need to apply for MTL licenses state by state, with some states even imposing stricter local regulatory requirements. For platforms aiming for full coverage of the US market, the application process can take years, with total investments potentially reaching millions of dollars. However, as the world's largest crypto capital market, the US regulatory licenses themselves possess strong institutional recognition and access to financial resources, making it a core compliance battleground fiercely contested by leading platforms.

It is precisely these high barriers to entry, high costs, and long-term investments that have led many trading platforms to choose to exit certain markets or slow down their global compliance expansion. Therefore, exchanges like Gate.com, which are able to obtain more high-barrier licenses first, often mean that they have already undertaken compliance building and localization preparations before global regulatory trends change. This includes team building, legal structure adjustments, improvement of risk control systems, and long-term communication with regulatory agencies. This requires stronger resource investment and strategic foresight from the platform, and also tests its commitment to long-term global operations.

For crypto platforms, obtaining a license is often only the first step in building compliance. The real challenge lies in long-term, sustained localized operational capabilities. Platforms not only need to build local teams deeply involved in business management, but also must fully understand local social culture, regulatory logic, and complex government-business relationships, while balancing local interest structures with compliance boundaries. This often means a long-term investment of human, financial, and resource capital. Otherwise, even if a license is successfully obtained, a lack of sufficient understanding of the local regulatory environment may lead to business restrictions or even license revocation.

More importantly, regulation itself is not static. After obtaining a license, platforms need to maintain long-term communication with regulatory agencies and continuously adjust their internal system architecture, risk control models, asset custody mechanisms, and compliance team configuration to adapt to ever-changing regulatory requirements. In other words, compliance is not a one-time licensing process, but requires a continuous and dynamic operational capability.

Conclusion

With regulatory compliance becoming an inevitable trend in industry development, compliance building will be a competition of "capital + execution + long-termism." The quality of licenses, regional coverage, and foresight in understanding regulatory trends will be the long-term competitive advantage of CEXs.

For example, Gate.com will continue to increase its investment in the compliance market in 2026 and focus more on localization operations and user base expansion. While consolidating its existing compliance footprint, Gate.com is also paying close attention to compliance opportunities in more emerging markets and actively exploring new business license applications. In addition to custody and trading, it will extend into payment, derivatives and other businesses.

As the crypto industry reaches a turning point towards mainstreaming and compliance, smaller centralized exchanges (CEXs) are being rapidly eliminated. Those that remain at the forefront may not necessarily be the platforms with the fastest business expansion. Compliance is becoming a new watershed moment in the crypto industry.

ZAMA's 24-hour trading volume exceeded $170 million, and Gate's trading volume ranked third among CEXs.

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