The European securities regulator, ESMA, has raised concerns about the high concentration of crypto trading on a few major exchanges. Its analysis found that the largest exchange, Binance, accounts for over 50% of global trading volumes.
ESMA warned that this level of market concentration “raises considerable concerns regarding the implications of a failure or malfunction at a major asset or exchange for the wider crypto ecosystem.” The regulator noted that while this concentration may provide efficiency gains, it poses significant systemic risks.
The findings come as the EU prepares to implement new crypto regulations under the Markets in Crypto-Assets (MiCA) framework. Binance, the dominant player, said it is committed to working with authorities on compliance and the industry’s sustainable growth.
ESMA’s report also highlighted the challenge of identifying the geographic origin of crypto trading, with a significant portion occurring on exchanges based in tax havens. This opacity adds to regulatory concerns about oversight in the crypto market.
As the industry evolves, ESMA’s analysis underscores the need for robust rules and transparency to mitigate the risks of concentration in the crypto exchange landscape.
