EU Watchdog Says Top Crypto Exchanges Control 90% of Trading Volume

The regulators in the EU have recently raised concerns about the monopolies forming in crypto trading services providers. The regulatory watchdog noticed that Binance accounts for 50% of aggregate trading volume.

However, the firm has lost market share by 40% since December 2023 and continued to decline and the trend has continued since 2022.

The European Securities and Market Authority (ESMA) highlighted the concentrated state of crypto trading and the potential risks that threaten the overall financial ecosystem.

Contribution of Top Exchanges in Crypto Trading Volume

A new research conducted by ESMA noticed that about 90% of all crypto transactions are handled by only 10 trading platforms, including Binance being the biggest contributor. The report confirms that Binance is now heading half of the total blockchain market share.

This report was published on 10th April as the EU was making arrangements for implementing MiCA. It is a comprehensive regulatory framework for cryptocurrency firms and service providers operating out of the EU.

These efforts are directed towards improving the operational efficiency and raise concerns about the repercussions of noteworthy failures and probable malfunction.

ESMA has noticed that the concentration is due to a single asset or trading platform dismantling that can spell issues for the entire crypto sector. The regulatory agency stated in a recently published report that the top 10 exchange account for around 90 percent of all crypto trading volume.

The current value of the aggregate trading volume in the EU for cryptocurrencies is estimated to be around $3.7 million with Binance handling 49% of the entire market share and Upbit accounts for one/seventh of trading volume.

Rising Crypto Investment Interest in the Region

ESMA projected that the trading volume of cryptocurrencies since 2019 has been in a state of constant development. It had a head start of 54%, and as per the ESMA latest data projections, has surged to 72%.

The report further noticed that Euro has maintained a restricted presence in the crypto sector regardless of the MiCA regulations. However, there is a pretense of ensuring customer protection to constitute potential growth after implementation in 2024.

ESMA told the media that the division of fiat money in digital asset trading has a high reliance on USD and South Korean won with the on and off-ramp market practices. The euro has played a minor role in the crypto sector which is why the announcement of MiCA regulations hasn’t led to an increase in euro transactions in the industry to date.

ESMA has also rejected the idea that crypto is a safe haven during periods of market stress on account of little correlation with equities and lack of stability in comparison to gold.

MiCA was launched in September 2020 and received a majority approval from the European Parliament in 2023. The regulatory framework intends to bring a new era of crypto asset regulations that will underscore a significant growth in the financial sector for digital assets.

Importance of MiCA

MiCA is applicable on a broach spectrum of digital assets that are inclusive of securities and electronic money. However, it does not encompass the entirety of traditional financial regulations applicable in the EU.

EU has rolled out a comprehensive regulatory framework for cryptocurrencies in the form of MiCA. ESMA has put an emphasis on the importance of supervision and risk management practices in the local blockchain sector.

Meanwhile, the regulatory challenges for crypto firms based out of the United States have continued to worsen. SEC commissioner Hester Pierce has taken a critical view of the policies of her regulatory agency.

A Cointelegraph update on the matter reported that Peirce kept springing up in the secret garden of policy guidelines of the regulatory firm. She publicized her criticism in response to the Staff Accounting Bulletin 121 that prevents banks from offering crypto custodial services to clients.

On the other hand, Director of Division of Enforcement Gurbir Grewal pushed back against these critical remarks noting that the agency is making up new rules about crypto. In the same way, SEC Speaks event Grewal noticed that a good number of crypto firms have undertaken several creative attempts to dodge the jurisprudence of regulatory agency by continuing operations.