Evaluating Crypto Exchanges in the Absence of Governmental Frameworks - A Multiple Criteria Scoring Model

Abstract

Since the introduction of Bitcoin in 2008, trading venues for cryptocurrencies, so called cryptocurrency exchanges, have undergone a fast development. Today cryptocurrencies totaling to more than USD 16bn are traded on more than 200 of such platforms, thereby surpassing the volume traded of numerous national stock exchanges. At the same time cryptocurrency exchanges are oftentimes not subject to a specific regulatory framework. Consumers who want to use these novel services are virtually left blindfolded when it comes to pivotal selection criteria. Yet, not even attempting to differentiate the quality levels provided by the various cryptocurrency exchanges would be tantamount to throwing out the baby with the bath water. In this work-in-progress paper, we develop an innovative scoring system to discriminate among cryptocurrency exchange offerings. In the absence of regulatory frameworks we identify 34 factors that may be considered by consumers when choosing the right cryptocurrency exchange offering. The advantages and disadvantages of such a scoring system are discussed and we provide suggestions for further development.

Keywords: Fintech, Innovation, Banking, Investment Decisions, Information Acquisition

JEL Classification: G14, G23, G24, G83, D52, D84, M13, M50, K42