By Huw Jones
LONDON (Reuters) – The excessive focus of cryptocurrency buying and selling on a number of exchanges, with Binance alone accounting for about half the market, is elevating issues concerning the affect of a failure on the sector, an EU securities watchdog mentioned on Wednesday.
The bloc is the primary on the earth to introduce a complete algorithm to manage the buying and selling of crypto-assets resembling bitcoin, ether and , requiring the permission of exchanges.
An in depth evaluation by the European Securities and Markets Authority of what’s being traded and by whom has discovered that the euro has to date solely performed a small function.
Buying and selling volumes are extremely concentrated, with 10 exchanges dealing with about 90% of trades and the most important, Binance, accounting for about half the market.
“Whereas this can be advantageous when it comes to effectivity attributable to economies of scale, it raises important issues concerning the penalties for the broader crypto-ecosystem of the failure or malfunction of a serious asset or change,” ESMA mentioned.
“We observe that market focus between exchanges has elevated over time, with Binance alone accounting for greater than 50% of buying and selling quantity.”
Binance mentioned in a press release that it believes the wholesome and sustainable development of the crypto trade is a key duty of the corporate and different market gamers.
“Our focus stays on … persevering with to spend money on compliance processes for a brand new period of regulatory certainty,” Binance mentioned.
hit an all-time excessive of $73,803.25 in March, however the complete worth of all cryptocurrencies — $2.7 trillion, in keeping with CoinGecko — nonetheless represents a tiny fraction of the worldwide monetary system.
ESMA mentioned that figuring out the origin of order stream or the geographic location of crypto exchanges stays problematic, with round 55% of present international buying and selling volumes happening on EU-licensed exchanges.
Most transactions happen off-block on exchanges primarily based in tax havens, ESMA mentioned.
“Opposite to the frequent declare that crypto-assets might characterize a secure haven throughout instances of larger market stress, we discover some co-movement with equities and no secure relationship with gold,” ESMA mentioned.
ESMA will maintain a webinar on 25 April to debate its findings.
