Defining Relevant Markets in the Crypto Economy

The regulation of cryptocurrencies and the application of antitrust law to cryptocurrencies is still in its infancy. As the definition of relevant markets may play a role both in antitrust law and other areas of the law, we discuss how existing methods to delineate relevant markets may be adapted to cryptocurrency market, in relation to consensus mechanisms, crypto exchanges, and transactional money.

By Florian Deuflhard & C.-Philipp Heller^[1]

I. INTRODUCTION

Since the creation of Bitcoin as the first cryptocurrency during the global financial crisis in 2009, an entire ecosystem has emerged.^[2] Consequently, cryptocurrencies and other applications based on blockchain technology have received increasing attention from regulators. While issues of taxation and securities law have come under intense regulatory scrutiny, cryptocurrencies and related markets increasingly raise concerns from an antitrust and competition law perspective.^[3] In the European Union, there are also plans to create an entirely new regulatory framework for cryptocurrencies.^[4]

An important dimension in the assessment of potential violations of antitrust and competition law and in the application of sector-specific regulation is the need to define the relevant market(s) in which firms compete.^[5] This allows the calculation of meaningful market shares as well as an assessment of market power and relevant competitive forces.^[6] For traditional markets, established methods to delineate relev