FT: crypto exchanges look more like brokers

Trading platforms for bitcoin and other digital assets do much more than just provide an electronic platform for investors to buy and sell securities. They provide safekeeping, handle client funds, act as a counterparty to trades, and — more recently — have started to lend and borrow.

This multi-faceted role has raised concerns that platforms may not always be serving the best interests of the customer. Rather than being a neutral party to transactions, like a stock exchange, a crypto platform can trade against customers, creating a situation where, for one side to win, the other must lose — meaning that retail clients are at risk of being treated unfairly.

Policymakers say that this is becoming a problem, given the ever-increasing financial and stability risks in a now $2 trillion market. Many are making concerted efforts to bring the mushrooming industry under oversight. As regulation tightens and competition from established exchanges intensifies, investors’ ability to roam free could pose the biggest test for the digital start-ups.

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