Competition Law and Virtual Asset Infrastructure Concentration

Introduction

Virtual asset infrastructure concentration refers to a situation in which a small number of firms control important layers of the crypto-asset ecosystem—such as cryptocurrency exchanges, custody, wallets, stablecoin issuance, blockchain validation, mining pools, payment rails, token listing, market-making, data, and execution infrastructure.

The competition-law problem is not simply that a firm becomes large. Concentration becomes legally significant where market power allows an undertaking to exclude competitors, discriminate against rivals, foreclose access to infrastructure, tie adjacent services, exploit network effects, or make entry and switching materially more difficult.

This issue is particularly important because virtual-asset markets exhibit strong network effects, liquidity effects, data advantages, interoperability dependencies and economies of scale. ESMA's analysis found that the crypto-exchange market had become highly concentrated by 2023: its calculated HHI was 2,616 and the five largest exchanges accounted for approximately 73% of trading volume.

1. Meaning of Virtual Asset Infrastructure

Virtual-asset infrastructure includes the technological and commercial systems necessary for creating, transferring, trading, storing and settling digital assets.

Major infrastructure layers

1. Centralised exchanges (CEXs)
   • Binance
   • Coinbase
   • Kraken
   • OKX
2. Decentralised exchanges (DEXs)
   • Automated market makers
   • Liquidity pools
   • Smart-contract-based trading systems
3. Custody infrastructure
   • Institutional custodians
   • Qualified custodians
   • Wallet infrastructure
4. Blockchain infrastructure
   • Validators
   • Mining pools
   • Node operators
   • Sequencers
   • Infrastructure providers
5. Stablecoin infrastructure
   • Issuers
   • Reserve managers
   • Redemption systems
   • Distribution networks
6. Market-data infrastructure
   • Price feeds
   • Oracles
   • Index providers
   • Liquidity information
7. Payment and settlement infrastructure
   • Crypto payment processors
   • Fiat on/off ramps
   • Settlement networks
8. API and interoperability infrastructure
   • Trading APIs
   • Wallet APIs
   • Cross-chain bridges
   • Custody interfaces

Concentration at any one of these levels can create competitive problems at neighbouring levels.

2. Why Concentration Is Particularly Important in Virtual Assets

A. Network effects

An exchange becomes more valuable as more traders use it.

More users → more orders → greater liquidity → narrower spreads → more users.

This can produce a self-reinforcing concentration cycle.

A new exchange may therefore face a significant disadvantage even if its technology is comparable.

B. Liquidity concentration

Liquidity is one of the most important competitive parameters in crypto markets.

A major exchange can attract:

• professional traders;
• institutional investors;
• market makers;
• token issuers;
• arbitrageurs.

Once liquidity becomes concentrated, competitors may struggle to achieve comparable execution quality.

This is important because an apparently small market-share advantage can become larger through network effects.

C. Data advantages

Large exchanges generate enormous quantities of:

• order-book data;
• transaction data;
• customer behaviour data;
• liquidity data;
• price information;
• trading patterns.

The resulting data advantage can make entry more difficult.

A dominant infrastructure provider may also potentially use data obtained from one market to compete in another.

3. Relevant Competition-Law Framework

A. India

The principal framework is the Competition Act, 2002.

Important provisions include:

Section 3

Deals with agreements causing or likely to cause an appreciable adverse effect on competition.

Section 4

Prohibits abuse of dominant position.

Relevant forms of conduct may include:

• unfair or discriminatory conditions;
• limiting technical or market development;
• denial of market access;
• leveraging dominance into another market;
• tying;
• exclusionary practices.

Sections 5 and 6

These provisions become relevant where concentration occurs through mergers, acquisitions or combinations.

The CCI's December 2025 approval of Coinbase's acquisition of a minority shareholding in DCX Global is particularly significant because it directly concerns the Indian crypto-exchange sector.

4. EU Competition Law

The traditional EU framework consists principally of:

• Article 101 TFEU — anti-competitive agreements;
• Article 102 TFEU — abuse of dominance;
• EU Merger Regulation — concentrations.

Article 102 can become relevant where a major crypto infrastructure operator has a dominant position and engages in exclusionary conduct.

The EU's Markets in Crypto-Assets Regulation (MiCA) provides an additional sector-specific regulatory framework for crypto-assets and crypto-asset service providers.

Competition law and financial regulation therefore operate alongside one another.

5. United States

In the United States, relevant competition-law provisions include:

• Sherman Act §1;
• Sherman Act §2;
• Clayton Act;
• FTC Act in appropriate circumstances.

Crypto infrastructure may be analysed under traditional concepts of:

• monopoly;
• attempted monopolisation;
• conspiracy;
• exclusive dealing;
• tying;
• vertical foreclosure;
• merger effects.

6. Market Definition Problems

Market definition is particularly difficult in virtual assets.

Possible relevant markets include:

Product markets

• cryptocurrency exchange services;
• Bitcoin trading;
• crypto-asset custody;
• institutional crypto custody;
• stablecoin issuance;
• crypto market-making;
• blockchain validation;
• crypto data services;
• wallet services;
• crypto payment services.

A regulator may also distinguish:

CEX services vs DEX services

or

retail trading vs institutional trading.

7. Geographic Market

The geographic market can potentially be:

• national;
• regional;
• EU-wide;
• global.

Virtual assets operate digitally across borders, but regulation can fragment markets.

For example, licensing requirements may make a crypto service available in one jurisdiction but not another.

Therefore, the relevant market is not necessarily global merely because the underlying blockchain is global.

8. Six Important Case Laws

Because dedicated judicial precedent on virtual-asset infrastructure concentration remains relatively limited, the most useful analysis combines the directly relevant cryptocurrency case with established antitrust decisions involving financial-market infrastructure, network effects, digital platforms, data and vertical foreclosure.

Case 1 — United American Corp. v. Bitmain, Inc. (2021)

Court: U.S. District Court for the Southern District of Florida

This is one of the most directly relevant cryptocurrency antitrust cases.

United American alleged that Bitmain and other defendants had engaged in conduct concerning the Bitcoin Cash network and attempted to manipulate competitive conditions surrounding the network.

The allegations concerned:

• cryptocurrency mining;
• hashing power;
• mining pools;
• blockchain governance;
• network control;
• alleged coordination.

The court ultimately dismissed the claims because the plaintiff failed to plead sufficient facts connecting alleged market power to an actionable restraint of competition. The case therefore illustrates that large market share alone is not sufficient; the claimant must establish the relevant market, market power and competitive harm.

Competition-law significance

The case demonstrates that:

Concentration of technical power is not automatically equivalent to unlawful monopolisation.

This is especially important for:

• mining pools;
• validators;
• sequencers;
• infrastructure providers.

Case 2 — Coinbase–DCX Global Combination, CCI (2025)

The Competition Commission of India approved Coinbase Global's proposed acquisition of a minority shareholding in DCX Global Limited, which owns the technology, brand and relevant intellectual property of the CoinDCX business.

This is especially relevant to Indian competition law because it represents direct merger-control scrutiny involving a crypto-exchange business.

Competition issues

A transaction of this nature may require examination of:

• crypto-exchange market shares;
• liquidity;
• customer network effects;
• entry barriers;
• access to trading infrastructure;
• data advantages;
• vertical relationships;
• ability to foreclose competing exchanges.

Significance

It illustrates that cryptocurrency businesses are increasingly treated as economic undertakings capable of falling within ordinary competition-law merger analysis.

Case 3 — LSEG/Refinitiv, EU Commission (2021)

Case M.9564

The European Commission examined the acquisition of Refinitiv by London Stock Exchange Group.

The businesses were active in:

• trading venues;
• financial infrastructure;
• clearing;
• financial data;
• indices;
• benchmarks;
• technology services.

The Commission identified horizontal and vertical competition concerns, including the combination of trading venues and the relationship between financial-market infrastructure and financial data. The transaction was ultimately cleared subject to remedies.

Application to virtual assets

This case is highly instructive for crypto infrastructure.

Imagine a crypto group controlling:

Exchange + custody + market data + index + clearing/settlement infrastructure.

The same competitive concerns could arise:

• access to data;
• vertical foreclosure;
• discriminatory data pricing;
• preferential access;
• leveraging infrastructure;
• exclusion of competing exchanges.

Thus, LSEG/Refinitiv provides an important analytical model for crypto-financial infrastructure combinations.

Case 4 — Deutsche Börse/NYSE Euronext

European Commission merger proceedings

The proposed transaction involved two major financial-market infrastructure groups operating in:

• exchange services;
• trading;
• clearing;
• derivatives;
• information services;
• technology.

The case illustrates the importance of analysing concentration not merely at the level of an exchange but across interconnected financial-market infrastructure.

Application to virtual assets

A comparable crypto transaction could involve:

Exchange + derivatives venue + clearing + custody + data + technology.

Competition authorities would need to consider whether the combination eliminates an important competitive constraint.

This is particularly relevant because crypto firms increasingly expand across multiple layers of the value chain.

Case 5 — Google Shopping

The EU Google Shopping litigation provides an important precedent concerning self-preferencing by a dominant digital platform.

The broader competition principle concerns the ability of a platform controlling an important gateway to favour its own downstream service over competing services.

Application to virtual assets

Consider a dominant crypto exchange that also operates:

• its own wallet;
• its own stablecoin;
• its own token;
• its own custody service;
• its own market maker.

The exchange could theoretically favour its affiliated products through:

• search placement;
• token visibility;
• listing arrangements;
• fee discounts;
• API access;
• liquidity allocation.

The competition concern would be particularly strong if competitors depend upon the dominant platform as an important gateway.

Case 6 — United States v. Microsoft

The Microsoft litigation remains important for analysing network effects, platform dominance and exclusionary conduct.

Microsoft's position in operating systems was reinforced by a network of complementary applications and developers.

Application to virtual assets

A crypto platform may similarly develop an ecosystem involving:

Exchange → Wallet → Stablecoin → Payments → Custody → DeFi → Data → Token ecosystem.

The larger the ecosystem becomes, the more difficult it may be for users and developers to migrate.

Competition authorities may therefore distinguish between:

competition for the market

and

competition within an established ecosystem.

9. Additional Relevant Precedent — Mastercard

The Mastercard litigation concerning interchange fees is useful for analysing two-sided markets.

Crypto exchanges are also often two-sided or multi-sided platforms connecting:

• buyers;
• sellers;
• market makers;
• token issuers;
• institutional investors;
• retail customers.

Therefore, pricing on one side cannot necessarily be evaluated independently from effects on another side.

For example:

Zero-fee trading for consumers does not necessarily mean that a platform lacks market power.

The platform could monetise:

• institutional trading;
• data;
• custody;
• listing fees;
• spreads;
• payment services.

10. Major Competition Concerns

1. Exchange concentration

A small number of exchanges may control a substantial percentage of trading activity.

High concentration can increase:

• dependence on dominant platforms;
• liquidity advantages;
• barriers to entry;
• systemic importance.

ESMA's data illustrates the scale of this issue: its 2023 analysis placed the five largest exchanges at about 73% of crypto trading volume.

2. Exclusive token listings

A dominant exchange could potentially impose arrangements under which a token issuer:

• lists exclusively;
• provides preferential liquidity;
• refuses rival exchanges;
• grants preferential market-making rights.

Competition authorities would examine whether such arrangements foreclose rival exchanges.

3. Self-preferencing

An exchange controlling the trading interface might favour its affiliated:

• stablecoin;
• wallet;
• token;
• custody service;
• liquidity provider.

This creates a classic vertical integration problem.

11. Exchange–Market-Maker Integration

This is one of the most significant structural concerns.

Suppose:

Exchange A owns Market Maker A.

The exchange possesses information concerning:

• orders;
• liquidity;
• customer flows;
• trading volumes;
• order-book depth.

The affiliated market maker may potentially receive an informational or operational advantage over independent market makers.

Competition analysis would therefore examine:

• information firewalls;
• discriminatory API access;
• execution priority;
• fee arrangements;
• order routing;
• access to liquidity.

12. Custody and Wallet Concentration

Custody can become an infrastructure bottleneck.

If an institutional customer holds assets through one major custodian, switching may involve:

• technical migration;
• security risks;
• compliance procedures;
• operational costs;
• integration changes.

These switching costs can create customer lock-in.

A dominant custodian could potentially leverage this position into:

• trading;
• lending;
• staking;
• settlement;
• asset management.

13. Stablecoin Concentration

Stablecoins are particularly important because they can operate as infrastructure connecting different crypto markets.

A widely used stablecoin may become a common settlement asset across:

• exchanges;
• wallets;
• DeFi protocols;
• payment systems;
• trading pairs.

This creates potential network effects.

Competition concerns may arise where an issuer:

• restricts interoperability;
• discriminates against competing platforms;
• bundles services;
• limits access to reserve or redemption infrastructure;
• favours affiliated exchanges.

MiCA itself recognises the importance of stablecoins and crypto-asset service providers within the regulatory structure.

14. API Access Discrimination

APIs are critical infrastructure for professional crypto trading.

A dominant exchange could theoretically provide:

Preferred API access → affiliated firms

while imposing:

Delayed / restricted API access → independent competitors.

Potential competition concerns include:

• denial of access;
• discriminatory terms;
• latency discrimination;
• data restrictions;
• technical interoperability barriers.

15. Data Monopolisation

A large exchange may control valuable datasets relating to:

• order books;
• transaction history;
• liquidity;
• pricing;
• customer behaviour.

A competition authority may consider whether access to such data is essential for competitors to compete effectively.

The issue becomes more significant where the same firm controls:

Trading + data + index + analytics + execution.

The LSEG/Refinitiv decision demonstrates why competition authorities can scrutinise combinations of financial-market infrastructure and data assets.

16. Cross-Market Leveraging

A dominant undertaking in one virtual-asset market may attempt to extend its power into another.

For example:

Exchange dominance

↓
Wallet services
↓
Stablecoin
↓
Custody
↓
Payments
↓
DeFi

This can create an ecosystem in which competitors must compete against an integrated infrastructure provider rather than an individual service.

17. Merger-Control Issues

Virtual-asset mergers require analysis beyond traditional market shares.

Authorities may examine:

Horizontal effects

Two exchanges merge.

Vertical effects

Exchange acquires a custody provider.

Conglomerate effects

Exchange acquires:

• wallet;
• stablecoin;
• analytics company;
• blockchain infrastructure.

Data effects

Two large crypto-data providers combine.

Ecosystem effects

A large platform acquires a complementary service that strengthens its network.

18. Essential-Facility Considerations

A difficult question is whether particular crypto infrastructure could constitute an essential facility.

Possible candidates might include:

• dominant exchange access;
• critical custody infrastructure;
• indispensable settlement infrastructure;
• unique market data;
• blockchain infrastructure.

However, essential-facility doctrine generally requires more than showing that access would be commercially useful.

The claimant would normally need to establish circumstances such as:

1. control of an important facility;
2. lack of reasonable alternatives;
3. inability or substantial difficulty in duplication;
4. competitive harm from refusal;
5. depending on the jurisdiction, additional doctrinal requirements.

Therefore, not every large exchange constitutes an essential facility.

19. Interoperability

Interoperability is particularly important because crypto markets are technically designed around network connectivity.

Competition concerns may arise when a dominant undertaking prevents:

• wallet portability;
• asset transfers;
• API connectivity;
• cross-platform trading;
• cross-chain interoperability.

Interoperability restrictions can increase switching costs and reinforce incumbent power.

20. Competition and Decentralisation

An important conceptual distinction is:

technological decentralisation ≠ economic decentralisation.

A blockchain may technically operate through many nodes while economic power remains concentrated in:

• a few exchanges;
• a few mining pools;
• a few validators;
• a few stablecoin issuers;
• a few infrastructure providers.

Competition law therefore needs to examine economic control, not merely the technical architecture.

21. Remedies

Competition authorities could potentially employ several remedies.

Structural remedies

• divestiture;
• separation of businesses;
• restrictions on acquisitions.

Behavioural remedies

• non-discriminatory access;
• interoperability;
• API access;
• data-access obligations;
• firewall requirements.

Merger remedies

• licensing commitments;
• access commitments;
• divestiture of overlapping assets;
• restrictions on exclusive arrangements.

Conduct remedies

• prohibition of tying;
• prohibition of discriminatory pricing;
• prohibition of self-preferencing;
• restrictions on exclusive dealing.

22. Special Problem of Regulatory Barriers

Not every concentration is caused by anti-competitive conduct.

Virtual-asset markets are heavily regulated.

Licensing requirements can:

• increase fixed costs;
• reduce the number of market participants;
• favour established firms;
• make cross-border entry difficult.

Therefore, competition authorities must distinguish between:

legitimate regulatory compliance costs

and

strategic exclusionary conduct disguised as regulatory compliance.

ESMA has specifically examined complex structures involving global crypto firms routing activity through non-EU execution venues, noting potential concerns regarding consumer protection and competitive conditions between EU-authorised venues.

23. Competition-Law Test for Virtual Asset Infrastructure Concentration

A useful analytical framework is:

Step 1 — Identify the infrastructure layer

Exchange / custody / wallet / stablecoin / data / mining / validation / settlement.

↓

Step 2 — Define the relevant market

Product + geographic market.

↓

Step 3 — Measure concentration

Market shares + HHI + liquidity + trading volume.

↓

Step 4 — Examine entry barriers

Technology + regulation + liquidity + network effects + data.

↓

Step 5 — Determine market power

Does the undertaking have the ability to behave independently of competitors/customers?

↓

Step 6 — Examine conduct

• exclusion;
• tying;
• self-preferencing;
• discriminatory access;
• exclusive dealing;
• refusal to deal;
• data foreclosure.

↓

Step 7 — Examine vertical effects

Exchange → wallet → custody → stablecoin → payments.

↓

Step 8 — Assess competitive effects

• higher fees;
• reduced innovation;
• reduced liquidity;
• less choice;
• reduced interoperability;
• increased switching costs.

↓

Step 9 — Consider efficiencies

Security, compliance, liquidity, technological integration and consumer protection.

↓

Step 10 — Determine appropriate remedy

Structural / behavioural / access / interoperability / data remedy.

24. Key Case-Law Principles

25. Conclusion

Virtual asset infrastructure concentration is a developing competition-law field in which traditional antitrust principles intersect with blockchain technology, network effects, liquidity, data, interoperability and financial-market infrastructure.

The central concern is not concentration by itself. The critical legal question is whether concentration creates market power capable of being exercised to restrict competition.

The principal risks are:

1. exchange concentration;
2. liquidity concentration;
3. custody concentration;
4. stablecoin concentration;
5. mining/validator concentration;
6. market-data concentration;
7. exchange–market-maker integration;
8. self-preferencing;
9. exclusive token arrangements;
10. API and interoperability restrictions;
11. data foreclosure;
12. leveraging from one crypto market into another.

The developing regulatory environment makes this especially significant. EU evidence already shows substantial concentration among major crypto exchanges, while India's Coinbase–DCX transaction demonstrates that crypto-exchange combinations are entering mainstream merger-control analysis.