The Architecture of Risk: A Cross-Sectional Analysis of Governance, Regulation, and Market Behavior in Cryptocurrency Exchanges

Abstract

The proliferation of cryptocurrency exchanges is central to the digital asset economy, yet the sector is plagued by operational failures and regulatory enforcement actions. Existing risk assessments often rely on simplistic metrics like trading volume, lacking a systematic framework for evaluating the qualitative factors that drive an exchange's risk profile. This study addresses this gap by constructing a comprehensive, multi-dimensional database of over 250 centralized cryptocurrency exchanges. Through a systematic due-diligence process utilizing public records, regulatory filings, and legal documents, we mapped each exchange’s governance structure, regulatory frameworks, product offerings, and geographic exposures. Our analysis of this database highlights a strong correspondence between the permissiveness of an exchange's primary jurisdiction and its operational risk. Notably, a clear pattern emerges where exchanges operating in jurisdictions with weak regulatory oversight and opaque ownership structures are more likely to offer high-leverage derivative products and be implicated in enforcement actions. This research provides a foundational framework and a structured dataset for regulators and investors, enabling a more nuanced assessment of an exchange’s operational and legal structure and moving beyond surface-level metrics to a deeper understanding of counterparty risk.