Financial exchanges still split on crypto

Regulated financial exchanges are talking about how to capitalise on interest in crypto, an industry group said on Tuesday, but a third of respondents to its latest survey said they had no plans to offer the asset class.

Exchanges said they were concerned about a lack of uniform regulatory standards, market volatility and the potential for cybersecurity risks relating to crypto assets, a report from the London-based World Federation of Exchanges (WFE) said.

Of 29 exchanges that responded to a survey by the WFE – whose members include US-based Nasdaq (NDAQ.O), Germany’s Deutsche Boerse (DB1Gn.DE) and Switzerland’s SIX Group – 12 offer crypto-related products or services while 17 do not, it said, without naming the respondents.

The group said of those with no current crypto-related offerings, just seven planned to introduce them in future, while 10 did not.

Cryptocurrency prices plunged in 2022 after a series of collapses at top crypto firms, including FTX, left investors with large losses, prompting lawmakers to step up calls for regulation.

Some 38 per cent of the exchanges the WFE surveyed have established, or plan to establish, working groups to focus on crypto-related assets or services.

Just over a quarter of respondents said they expect crypto assets to become mainstream in the near future, the WFE said.

“Crypto is at the forefront of all of our members’ minds and we are in constant dialogue with them about how to capitalise on the new opportunities in the area,” said WFE CEO Nandini Sukumar.

Mainstream financial institutions have long expressed interest in the potential for blockchain – the technology behind cryptocurrencies – to be used in the process of issuing and trading traditional financial assets. The tech has, however, yet to be deployed on a major scale.

On Monday, the London Stock Exchange Group (LSEG.L) said it was looking into using blockchain to build a system “to raise and transfer capital across asset classes”, but that this would not involve building anything around crypto assets.