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Market structure of cryptoasset exchanges: Introduction, challenges and emerging trends

Author

Listed:
  • Vladimir Skavysh
  • Jacob Sharples
  • Sofia Priazhkina
  • Salman H. Hasham

Abstract

Centralized trading platforms, or exchanges, are playing an increasingly important role in expanding the global crypto ecosystem. In contrast with their counterparts in traditional financial markets, these exchanges are vertically integrated and solely responsible for the execution, clearing and settlement of transactions. Moreover, exchanges often act as the custodian of users’ assets, which exacerbates the risk borne by its users. In this note, we provide an introduction to the functions that cryptoasset exchanges typically perform and contrast their design with infrastructure used in traditional financial markets. We also discuss several emerging trends in regulation and financial innovation that help address the problems cryptoasset exchanges face.

Suggested Citation

  • Vladimir Skavysh & Jacob Sharples & Sofia Priazhkina & Salman H. Hasham, 2024. "Market structure of cryptoasset exchanges: Introduction, challenges and emerging trends," Staff Analytical Notes 2024-2, Bank of Canada.
    • Handle: RePEc:bca:bocsan:24-2
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    More about this item

    Keywords

    Digital currencies and fintech; Payment clearing and settlement systems;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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