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Unregulated digital exchanges as bottleneck

Author

Listed:
  • Rattaggi, Mattia L.

    (METI Advisory AG, 6300 Zug, Switzerland)

  • Schenk, Luca

    (Xwiss AG, 6300 Zug, Switzerland)

Abstract

Since the creation of Bitcoin in 2009, digital exchanges have demonstrated that global, 24/7 and disintermediated trading is possible. By trading digital currencies, they have grown to a size impossible to ignore. To allow digital exchanges to enter the multitrillion market of securities trading and business, technology and regulators need to work hand in hand. Together, they are in a position to solve the challenges of a steep learning curve and build an efficient, convenient and, most importantly, trustable environment that can protect investors. Regulators face the challenge of channelling the path but are potentially also among the biggest beneficiaries of the inevitable transition from traditional stock exchanges to digital asset exchanges, since compliance may be ensured by design. While ensuring personal data protection and jurisdiction particularities, global standardisation and distributed ledger technology (DLT) can effectively forestall trading errors and market abuse instead of leaving them to be discovered. To generate the necessary trust for market participants to adopt, digital exchanges will have to be regulated, licensed and supervised in the same way that traditional stock exchanges are today, while safeguarding and leveraging the technological benefits that DLT carry.

Suggested Citation

  • Rattaggi, Mattia L. & Schenk, Luca, 2021. "Unregulated digital exchanges as bottleneck," Journal of Digital Banking, Henry Stewart Publications, vol. 6(3), pages 262-269, December.
    • Handle: RePEc:aza:jdb000:y:2021:v:6:i:3:p:262-269
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    More about this item

    Keywords

    finance; exchanges; cryptocurrencies; cryptofinance; Blockchain; DLT;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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