Traditional financial exchanges, which have historically set the standard for market infrastructure, are now facing the need to consider the structural innovations introduced by crypto platforms, writes Matt Barrett, chief executive, Adaptive.
Driven by retail demand, crypto exchanges are built to withstand intense competitive pressures, from 24/7 trading to frictionless global access. These conditions require them to prioritise resilience, rapid feature iteration, and scalability. Traditional exchanges have their own strengths – deep liquidity, well-defined central limit order books, and clear regulatory frameworks. Still, the crypto world offers lessons: if your platform is built on rigid systems that are slow to adapt or integrate new asset classes, you risk falling behind.
So, what makes crypto exchanges different and what can we learn from them?
24/7 market access with no downtime
Traditional financial exchanges benefit from trading windows, allowing them to schedule updates, run batch processes, and reconcile post-trade activity after market close.
In contrast, crypto markets operate 24/7, meaning teams must aim for continuous uptime. There’s no switch-off for maintenance or to roll out new updates. Monitoring and resolving issues in real time is key. Rolling updates and modern distributed system design lets them maintain 99.999% uptime of their systems.
The lesson being that cloud-based systems and modern modular tech stacks, such as sequencer architectures, allow crypto exchanges to decouple core functions -trading, risk, compliance, onboarding – so they can scale or upgrade services independently whilst maintaining fault tolerance and continuous operations. This adaptability is vital as regulators increasingly discuss the inevitability of round-the-clock trading in traditional markets.
A fast-moving competitive landscape and demanding users
Crypto’s competitive environment is faster and more fluid than in traditional markets, driven by fewer regulatory constraints, a digital-native user base, and generally modern architecture and less technical debt.
New players can gain traction seemingly overnight. Crypto derivatives platform, Hyperliquid, for instance, launched its perpetuals exchange in 2023 with little mainstream attention. Yet, the exchange has already achieved billions in daily trading volume and is ranked fifth in open interest, trailing only established giants like Binance.
Demonstrably, in an era of continuous technological advancement, capital markets must relentlessly innovate to stay competitive.
Exchanges that adopt cloud infrastructure, open-source technologies, and modular design gain the agility to launch new products, respond to competitors, and iterate faster. Legacy systems can’t compete at that speed or scale.
Cloud-native platforms and elastic, open ecosystems not only reduce costs and technical debt, they also enable faster deployment of new services. For exchanges that means moving from monolithic infrastructure to flexible, upgradeable systems that support this ongoing innovation.
Regulatory uncertainty
Crypto exchanges operate in an uncertain regulatory environment. Until recently, many governments were still sceptical of them, citing consumer protection and systemic risk.
This appears to be changing. With a pro-crypto administration in the US and clearer frameworks emerging in the UK and EU, institutional investment is growing. US crypto funds now hold a record $167 billion, and around half of traditional hedge funds have exposure to digital assets.
This is just the beginning, however. As new rulebooks evolve, especially around custody, disclosure, and know-your-customer processes, exchanges must be ready to adapt at short notice.
Modular architecture gives crypto exchanges that flexibility to respond to regulatory changes quickly. By separating critical components like risk and matching engines, custody systems and compliance tools, they can adjust or replace individual systems.
This composability is essential for exchanges navigating multi-jurisdictional compliance or scaling into new markets.
Building for change
Crypto exchanges have been quick to embrace the cloud for velocity and scalability, showcasing what’s possible when innovation is a foundational principle. Concerns around resilience and performance have been addressed via new emerging technologies and modern architecture design principles.
Even the most established exchanges need to adapt their operations to emerging technologies such as AI and machine learning as well as new asset classes, 24/7 trading and evolving regulatory environments.
The common threads are technology and architecture. Modular systems, cloud infrastructure, and open-source foundations are key building blocks for long-term agility and resilience. Owning the intellectual property of their exchange technology empowers firms with full control over their product roadmap, enabling rapid innovation, strategic differentiation, and long-term competitiveness without being constrained by vendor lock-in. If traditional exchanges want to compete in tomorrow’s markets, they need to rethink how they build today.