Binance Sees Major Drop in Market Share Amid Regulatory Action – Crypto News – Crypto News
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Binance Sees Major Drop in Market Share Amid Regulatory Action – Crypto News

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3 years ago

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Blockchain data and research firm Kaiko recently reported that Binance’s market share has dropped to a one-year low amid increased regulatory scrutiny on the exchange.

Earlier this month, the US SEC slapped a suit on Binance.US on 13 different accounts in violation of federal securities laws. Back then, Binance’s spot trading market share remained unchanged at 56%. However, the latest data from Kaiko shows that it has now dropped to 53.7%, the lowest since August 2023.

Earlier this year on April 6, the exchange’s daily market share had also plunged to a low of 47%. This was soon after the lawsuit from the US Securities and Exchange Commission (SEC). Crypto exchanges like Binance are facing more pressure as big players from traditional finance, such as BlackRock Inc., want to enter the market and offer regulated Bitcoin exchange-traded funds.

These players are trying to attract investors who prefer dealing with regulated institutions. Alex Svanevik, chief executive officer of crypto intelligence firm Nansen, told Bloomberg:

“Centralized exchanges will find themselves in a squeeze between decentralized exchanges and traditional-finance players entering the market”.

Binance and Other Exchanges Face Regulatory Heat

The report from Kaiko notes that Binance’s American affiliate Binance.US has lost almost all of its market share following the regulatory action from the SEC and the CFTC.

Another reason behind Binance’s drop in market share is the exchange halting its zero-fee promotion back in March 2023. But Binance is not the only exchange facing the heat of the regulatory onslaught.

Another US-based crypto exchange Coinbase, sued by the SEC this month, saw its market share drop to 6.8% this month from 7.6% earlier this year in January 2023.

Despite experiencing a decline in market share throughout 2023, Binance still surpasses all other crypto exchanges combined in terms of size. This gives Binance an advantage by offering a larger pool of liquidity and trading options.

Additionally, the exchange holds the largest amount of customer tokens, with reserves totaling $59.2 billion, as reported by crypto data provider DefiLlama.

Since there aren’t many reliable alternatives currently available, investors may continue to view Binance as the preferred exchange for transactions. The crypto exchange has a proven track record of providing high liquidity and market depth for trading, which helps limit the potential decrease in its market share.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explores his culinary skills.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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