LONDON -The high concentration in crypto trading on a handful of exchanges, with Binance alone accounting for about half the market, raises concerns about the impact of a failure on the sector, the EU's securities watchdog said on Wednesday.
The European Securities and Markets Authority's detailed analysis of what's being traded and by whom found that so far the euro currency plays only a minor role. "While this might be advantageous from an efficiency standpoint due to economies of scale, it raises considerable concerns regarding the implications of a failure or malfunction at a major asset or exchange for the wider crypto ecosystem," ESMA said.
ESMA said identifying the origin of order flow or the geographic location of crypto exchanges remains problematic, with about 55% of current global trading volumes executed on exchanges that hold an EU licence."Contrary to the frequent claim that crypto assets could represent a safe haven in times of wider market stress, we find a certain co-movement with equities and no stable relationship with gold," ESMA said.
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