Definition ∞ Financial Market Fragmentation refers to the division of financial markets into smaller, disconnected segments, often due to differing regulatory frameworks, technological incompatibilities, or distinct trading venues. This can hinder the efficient flow of capital and information, leading to disparities in pricing and liquidity across various market participants. It presents challenges for unified market operations.
Context ∞ In the digital asset space, Financial Market Fragmentation is a significant concern, stemming from the global and often unregulated nature of blockchain networks and varying national legal approaches. Efforts to address this involve developing cross-chain interoperability solutions and harmonizing international regulatory standards. Reducing fragmentation is seen as crucial for achieving greater liquidity and stability within the broader digital economy.
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