New York. US exchanges handle about 29 per cent of global Bitcoin trading — much more than previously thought because some unregulated rivals overseas are inflating their volumes, according to estimates from a firm working to create a crypto exchange-traded fund.

The US is the world’s second-largest domicile for exchanges by trading volume after Malta, Bitwise Asset Management found in a report. The company filed the document with the Securities and Exchange Commission on March 20 as it seeks approval for an ETF. It argues that figures indicating the US handles only 1 per cent of investor trades aren’t accurate, and that the market is actually better regulated than popularly thought.

The firm claims in its report that some exchanges inflate their trading volume to appear higher in rankings. That status can help to attract more users, generating fees. Bitwise drew its conclusion, in part, by analysing the trade sizes, volumes and pricing that exchanges report. While some show “natural patterns,” such as prices and spreads that move similarly, others are “idiosyncratic and highly suspicious,” the authors wrote.

They credited US exchanges including Kraken and Coinbase as showing “consistent and intuitive patterns,” estimating they handle a greater share of spot trading than the amounts touted by some rivals. Bitwise said that only 10 of the world’s 81 significant exchanges — more than half of them based in the US — actually generate significant trading volume. That analysis excluded exchanges in Korea because it has an “isolated market” due to local rules.