Opinion: Arthur Azizov, founder of B2 Ventures

Transaction cost analysis (TCA) has long been an critical tool in stock trading. Thanks to this instrument, investors can see the hidden costs associated with the transaction and minimize the difference between the expected and actual price.

As cryptocurrency matures, it begins to resemble time-honored financial markets and function like other tradable instruments. Cryptocurrency transactions also involve costs: fees that investors pay every time they buy or sell cryptocurrency.

However, there is one thing that clearly has not kept pace with this development. Cryptocurrency execution costs analyzed systematically. Understanding how much it actually costs to make a deal leaves a lot to be desired.

This opacity requires the crypto industry to urgently adopt transaction cost analysis before it kills market confidence.

Concealed costs in the cryptocurrency market

To the untrained eye, the major cryptocurrency pairs may seem fluid; the order books are deep and quoted spreads are competitive. Ultimately, however, the final strike price may differ from the expected one due to slippage.

For example, an investor wanted to buy 1 Bitcoin (BTC) for $90,000, but due to sudden market volatility, the final price was $90,900. In this case, slippage would be $900, or 1% of the intended transaction amount.

This problem is not only inherent to cryptocurrencies; it also exists in time-honored finance. In equity markets, however, these costs are precisely measured, compared and analyzed using TCA, combined with best execution.

In contrast, in the case of cryptocurrencies, it is often arduous to manually calculate or predict the actual entry or exit price. This is where TCA becomes as valuable as it can be enable cryptocurrency traders to break down the true cost of execution by knowing exactly the bid-ask spreads, market effect and order routing fees.

Thanks to TCA tools, cryptocurrency transactions can become more see-through, and investors can easily identify the sources of costs associated with executing transactions.

Cryptocurrency transactions can be arduous to value

However, if it were that straightforward in real life, TCA analysis would already be an integral part of cryptocurrency markets. The main problem is that cryptocurrency prices are highly volatile, changing every millisecond, and trading takes place around the clock. This has a significant impact on transaction execution costs, as sometimes investors simply do not make purchases on time.

Liquidity is low and fragmentation due to the existence of multiple exchanges remains high. This situation is made worse as some platforms may experience outages or less liquidity available, causing even greater slippage.

Speaking of costs, things get unclear in cryptocurrencies. Some costs can often be tacitly included in trade prices, complicating the “total consideration.” It is arduous to truly know the full cost of a transaction.

There is also the problem of lack of data. A reliable analysis of transaction costs requires standardized data. For example, in stock markets, information is usually available from centralized sources. Because cryptocurrencies are decentralized, trading activity is fragmented across multiple exchanges and platforms, making it arduous to aggregate data and conduct reliable analyses.

The cryptocurrency market also suffers from a lack of regulation and a universal definition of TCA or best execution. As a result, portfolio performance depends largely on external factors, such as the speed of transactions or the “health” of the market, rather than on the capabilities of the asset manager or investor.

Towards measurable implementation

Regulators are beginning to recognize this enforcement gap. For example, in 2025, the European Securities and Markets Authority updated its standards, including best execution, to go beyond equities to include asset classes such as foreign exchange, commodities and, most importantly, cryptocurrencies.

Related: Temple Digital Group Launches 24/7 Institutional Trading in Guangzhou

This does not introduce transaction cost analysis per se and does not define specific performance indicators, but it does set an critical precedent. Transparency of execution becomes more mandatory for digital assets.

While legalization alone cannot solve the problem of concealed transaction costs, it still causes investors to think more about the need for TCAs. If market participants see how much it really costs to trade and how these additional fees vary between exchanges, the market will become more productive.

The dilemma of distributed data and lack of standardization is now being solved by cloud computing and huge data analytics, which have made it much easier and less exorbitant to collect and process gigantic volumes of data. With machine learning, platforms can perform cross-place transaction cost analysis and identify patterns that were previously unavailable.

Massive exploit of TCAs would support investors reduce costs and raise liquidity. Trading volume flows would gradually shift to places with better conditions, which would stimulate competition between exchanges and assets.

Opinion: Arthur Azizov, founder of B2 Ventures.