Vertical Integration Risk

Definition ∞ Vertical integration risk describes the potential drawbacks or vulnerabilities arising when a single entity controls multiple stages of a supply chain or operational process. In the digital asset ecosystem, this could mean one company managing everything from mining and exchange services to wallet provision and protocol development. Such extensive control can lead to reduced competition, increased single points of failure, and potential for market manipulation. It counters the principles of decentralization.
Context ∞ Vertical integration risk is a recurring concern in crypto news, often discussed in relation to large corporations that operate across various segments of the digital asset market. Reports highlight the potential for these entities to exert undue influence over market infrastructure or stifle innovation. The discussion includes regulatory scrutiny aimed at preventing anti-competitive practices and promoting a more distributed ecosystem. Addressing this risk is important for maintaining fair and open digital asset markets.