Morgan Stanley has been researching the financial sector for decades and gained universal acclaim as it was able to provide governments and other institutions valuable insights, which have significantly aided their development. The company has just released a new research which targeted crypto markets, specifically exchanges. The research measured trading volumes in different regions and estimated a number of total crypto exchanges.
Researcher team, led by analyst Sheena Shah, found out that the country, accounting for the largest share of crypto trading volume is Malta. While this might seem surprising at first, this is largely due to the fact that Binance, the largest crypto exchange in the world, has recently relocated its legal headquarters to the small island country. Malta is followed by Belize, Seychelles, United States and South Korea respectively. You won’t be shocked to know that OKEx, the second largest exchange, is registered in Belize.
Countries that host the biggest number of digital currency exchanges are as follows: the United Kingdom, Hong Kong, the United States, Singapore and Turkey. Interestingly, the UK has more legally registered exchanges than any other country in the world but adds to just 1% of the total trading volume.
One of the primary findings was the obvious data discrepancy in the case of Malta and Belize, who top the list of trading volume but rank only 22nd and 24th in terms of registered exchanges. The contradiction is easily explained by the fact that they host two of the largest global exchanges but what brought them to these small countries in the first place?
Obviously, the main factor considered by exchanges is how favorable the local crypto regulations are towards a digital currency business. In an interesting insight, Ms. Shah added that to be attractive, the regulatory framework does not necessarily need to be permissive (although that is of course a positive) but rather clear, well-defined and easy to understand. While countries, such as the US or India have moved to increasingly scrutinize the crypto industry, other countries like Malta, Switzerland or Gibraltar have jumped at the opportunity to attract them, and the tax money they will bring, to their shores.
According to Ms. Shah, “Defined but also attractive regulation makes an exchange decide to choose one country over another, a series of rules, regulations, and laws for companies to abide by when dealing with digital tokens, customer assets, AML policies, taxes, etc. Regulatory certainty is part of the attractiveness for the companies so they can plan for the future as they know what to expect. Low taxes are a benefit.“
The government of Malta has recently announced its plans to become a “Blockchain island” and has since maximized its efforts to create a legislation for virtual currencies and distributed ledger technology. The relocation of Binance alone clearly shows its success and it seems that Malta is ready to welcome other crypto businesses and reap the benefits.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.