Hey #fintwit, I’ve been looking more into how exchanges operate thanks to @HideNotSlide, and I’m more than likely gonna write a thread on them soon. Are there any weaknesses that exchanges suffer from that I may be missing?
Thanks for the shoutout! I'd say an exchange's strength can also be its weakness ie the macro environment & regulation. If volatility is low exchanges can't really change the environment & performance is left to market forces. Regulation also outside of most exchanges control.
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When you say that regulation can be an exchange’s weakness, are you referring to regulatory costs? Regulatory costs can eat into their margins, but wouldn’t that be a net positive as the barriers to entry get higher?
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In many ways it is a positive but in certain asset classes its a weakness. Look at US equities (lower barriers to entry, highly regulated) and
@brian_armstrong’s recent thread re SEC crypto aggression as an example. - Show replies
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