Competition in the Cryptocurrency Exchange Market

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

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Paper Title: Competition in the Cryptocurrency Exchange Market

Speaker: Anthony Zhang, The University of Chicago

Time and Date: 12 – 1 pm, Wednesday 9 August 2023  (AEST)

Venue: Face-to-face seminar in room CB08.08.02, Level 8, Building 8, University of Technology Sydney, 14-28 Ultimo Rd, Ultimo, Sydney, Australia (Map of campus)

Abstract:  How do cryptocurrency exchanges compete with each other? We show that small and large crypto exchanges appear to be complements, rather than substitutes, as traditional oligopoly theory would predict. When large exchanges list new tokens, trade volumes on small exchanges increase, and small exchanges become more likely to list. We rationalize these facts in a model where small exchanges have captive customer bases, and rely on arbitrage trade with large exchanges for liquidity provision. Our results imply that large exchanges’ listing decisions play a systemically important “leader” role in determining trade volumes and listings on other exchanges

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Co-ordinator: Kenny Phua

Enquiries: Chloe Qu

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