The future of the market structure for digital assets is undergoing a transformation propelled by innovation and regulation in Europe. Despite many challenges, the institutional crypto derivatives market is
evolving in the region.
A report released by Acuiti in association with D2X shows that this market is shifting. It is marked by innovations, less
reliance on intermediaries, and increasing exchange-operated functions. Although there is enhanced access and trading efficiency in this asset class, vulnerabilities exist.
The emergence of native crypto derivatives markets has
resulted in innovative risk management mechanisms like real-time margining and
auto-deleveraging. This has reduced counterparty risk without central
clearinghouses. However, challenges such as the concentration of risk at
exchanges and high initial margin requirements persist.
The regulatory frameworks, like the Markets in Crypto Assets (MiCA), aim to change market dynamics by bridging crypto and traditional
markets. This shift is expected to promote more institutional engagement, with
86% of the respondents surveyed in the study anticipating increased participation.
According to the report titled, the Future of
Digital Assets Market Structure in Europe, institutional interest in crypto derivatives trading varies across sectors. Proprietary trading firms exhibit the
strongest demand, while others show varying…
