A Team of Morgan Stanley researchers, led by analyst Sheena Shah, after conducting a study of cryptocurrency exchange distribution, have concluded that local crypto businesses regulations are one of the main factors that exchanges take into account when selecting where to register.
In terms of popularity Malta, with its well defined regulatory framework, has become a crypto-hub, now accounting for the largest share of cryptocurrency volume globally. The announcement that crypto exchange giant Binance has now made Malta home, followed by similar plans from other exchanges has the industry looking in its direction.
According to the recent Morgan Stanley research, based largely on volume data from Coinmarketcap, the top countries by trade volume are Malta, Belize, Seychelles, the US and South Korea. The largest number of exchanges are found, in order of number, in the UK, Hong Kong, USA, Singpore, and Turkey.
Although both Malta and Belize showed to have far fewer exchanges than many other countries listed, they had the highest volume of trade. The researchers accounted for this by suggesting that the two biggest exchanges are located there; Binance in Malta and OKEx in Belize. Shah suggested:
“The largest exchange called Binance announced intentions to set up headquarters there, so if we take that company out, Malta would be much further down the list.”
Notably, the research showed that the UK, the country with the most exchanges, only accounted for one percent of the total trading volume. The UK Financial Conduct Authority (FCA) recently commented that cryptocurrencies as a means of payment or exchange were not within its regulatory perimeter, and that the “landscape was complex.” This is clearly language which is not encouraging for exchanges looking for a new home.
Shah commented that companies need to know what to expect on choosing a country to do business in when planning for the future, arguing “Defined but also attractive regulation makes an exchange decide to choose one country over another.”
She said that exchanges felt that they needed to follow a set of laws of when handling customer assets and they didn’t necessarily need to be lenient, but they should be well defined.