ESMA Issues Warning: 10 Exchanges Handle 90% of Crypto Trades

Crypto News -In a detailed examination of the cryptocurrency market, the European Securities and Markets Authority (ESMA) has unveiled the significantly concentrated landscape of crypto trading and the potential risks it presents to the wider financial ecosystem.

ESMA Issues Warning: 10 Exchanges Handle 90% of Crypto Trades

The report, issued on Wednesday, coincides with the European Union’s preparations to enact the world’s inaugural comprehensive regulatory framework for cryptoassets, known as MiCA.

EU Regulator Raises Alarms Regarding Concentration in Crypto Market

According to ESMA’s research, only ten exchanges handle roughly 90% of all cryptocurrency trades, with Binance, the largest exchange, commanding a remarkable 50% of the market. Recent data from the Finance Magnates Intelligence study corroborates the watchdog’s findings, highlighting the escalating volumes of trades on the top 10 crypto exchanges.

While this level of concentration may enhance efficiency, it raises significant concerns about the potential repercussions of a major exchange experiencing a failure or malfunction.

ESMA commented in its report, The top 10 exchanges execute around 90% of total trading volume, and with a volume of over USD 3.7 trillion or a market share of 49%, Binance is the largest exchange. The runner-up, Upbit, recorded only about a seventh of this volume.

Euro Holds Little Significance in Crypto Transactions

The report further discloses that the euro holds minimal significance in cryptocurrency trading, with the majority of transactions taking place outside the EU on exchanges located in tax havens.

ESMA elaborated, The distribution of fiat currencies involved indicates a heavy reliance on the US dollar and the South Korean won as the primary on- and off-ramps for the market. The euro occupies a minor position, and the introduction of MiCA regulation has not yet led to an increase in euro transactions.