The European Securities and Markets Authority (ESMA) warned that crypto markets are extremely targeting April 10.
ESMA mentioned focus is a priority as a result of a single asset or alternate failure might broadly affect the crypto ecosystem.
In accordance with the company’s findings, market capitalizations and buying and selling volumes are “considerably concentrated” in a small variety of property throughout the crypto market.
Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) accounted for 74% of the crypto market cap in December 2023 and made up greater than half of 2023’s annual buying and selling quantity.
Exchanges additionally demonstrated concentrated buying and selling volumes, as simply 10 platforms dealt with 90% of buying and selling. Binance alone accounted for about half of all buying and selling quantity, although its dominance fell to 40% by December 2023 and has been on a gentle decline total since December 2022.
ESMA warned that particular person cryptocurrencies are extremely interconnected and present robust worth correlations with one another. Moreover, it described a constructive correlation between crypto and equities, demonstrating danger plus an absence of a secure relationship with gold.
The company mentioned it doesn’t think about crypto an efficient “protected haven” in mild of its evaluation.
The EU perspective
Particular findings are notably related to the EU’s regulatory actions. Of the 20% to 30% of crypto transactions involving fiat, 80% concerned the US greenback or South Korean gained. The euro performed a “minor function,” accounting for about 10% of fiat transactions.
The euro’s involvement in fiat-crypto transactions didn’t enhance even after the EU adopted the Markets in Crypto-Property (MiCA) regulation in June 2023. Nonetheless, ESMA mentioned that MiCA guidelines might “represent a possible progress driver” when applied this yr.
Trade location is one other difficulty. Though 55% of transactions occurred on exchanges with an EU Digital Asset Service Supplier (VASP) license, most of the identical transactions occurred outdoors of the EU. About half of crypto buying and selling volumes happen on exchanges primarily based in tax havens, whereas Europe-based exchanges buying and selling quantity is sort of non-existent.
ESMA mentioned that MiCA will tackle location-related issues by way of disclosure necessities, enhancing transparency at the same time as crypto exchanges broaden to new jurisdictions.
The company mentioned that its analysis broadly “helps the implementation” of MiCA.
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