The high concentration of cryptocurrency trading in a handful of exchangewith Binance alone representing about half of the market, raises concerns about the impact of a bankruptcy on the sectorThe European Union’s securities watchdog said on Wednesday.
The block is putting in place the world’s first comprehensive set of rules to regulate trading in cryptoassets like bitcoin and ether.demanding that the bags be authorized.
The detailed analysis of the European Securities and Markets Authority (ESMA) on what is negotiated and who negotiates it has revealed that, so far, the single currency plays a secondary role.
Trading volumes are highly concentrated: ten exchanges process around 90% of trades, and the largest, Binance, accounts for almost half of the market.
“While this could be advantageous from an efficiency standpoint due to economies of scale, it raises considerable concerns regarding the implications of a failure or malfunction in a major asset or exchange for the broader crypto ecosystem.”said ESMA.
“We note that market concentration among exchanges has increased over time, with Binance alone accounting for more than 50% of trading volume”he added.
Bitcoin hit an all-time high of $73,803.25 in March, but the total value of all cryptocurrencies – $2.7 trillion, according to CoinGecko – still represents a small fraction of the global financial system.
According to ESMA, it is problematic to identify the origin of order flow or the geographical location of cryptocurrency exchanges, as around 55% of global trading volumes are executed on EU-licensed exchanges. Most transactions occur outside the block on exchanges domiciled in tax havens, he said.
Source: Ambito
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