Crypto buying and selling focus a 'appreciable concern', EU watchdog says

By Huw Jones

LONDON (Reuters) -The excessive focus in crypto buying and selling on a handful of exchanges, with Binance alone accounting for about half the market, raises issues in regards to the affect of a failure on the sector, the EU’s securities watchdog stated on Wednesday.

The bloc is rolling out the world’s first complete algorithm to control buying and selling in cryptoassets reminiscent of bitcoin, Ether and , requiring exchanges to be authorised.

The European Securities and Markets Authority’s detailed evaluation of what is being traded and by whom discovered that up to now the euro foreign money performs solely a minor function.

Buying and selling volumes are extremely concentrated, with 10 exchanges processing about 90% of trades, and the most important, Binance, accounting for about half the market.

“Whereas this could be advantageous from an effectivity standpoint attributable to economies of scale, it raises appreciable issues relating to the implications of a failure or malfunction at a serious asset or trade for the broader crypto ecosystem,” ESMA stated.

“We observe that the market focus amongst exchanges has elevated over time, and that Binance alone accounts for greater than 50% of buying and selling quantity.”

Binance stated in an announcement that it believes that the wholesome and sustainable progress of the crypto business is a key accountability for the corporate and different gamers available in the market.

“Our focus continues to be on… persevering with to spend money on compliance processes for a brand new period of regulatory certainty,” Binance stated.

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 stated figuring out the origin of order stream or the geographic location of crypto exchanges stays problematic, with about 55% of present international buying and selling volumes executed on exchanges that maintain an EU licence.

Most transactions happen outdoors the bloc at exchanges domiciled in tax havens, ESMA stated.

“Opposite to the frequent declare that crypto property might symbolize a secure haven in occasions of wider market stress, we discover a sure co-movement with equities and no secure relationship with gold,” ESMA stated.

ESMA will maintain a webinar on April 25 to debate its findings.