It's in the name, isn't it? An exchange is where assets are exchanged. For that service they get a fee, usually tied to the transaction volume. Pay any expense

It's in the name, isn't it? An exchange is where assets are exchanged. For that service they get a fee, usually tied to the transaction volume. Pay any expenses out of that fee and keep transactions rates high is a good mode for survival. Unfortunately, if asset prices depreciate, fees tank too. But that's manageable. What's not manageable though if you start using assets of your customers to create a new revenue stream by locking those assets up somewhere or by using them for high-risk trades. When people start asking their assets back you suddenly have a problem.