Crypto Giant Binance Loses Market Share Amid Regulatory Pressure and Competition

Crypto Giant Binance Loses Market Share Amid Regulatory Pressure and Competition

Crypto News – Binance, the world’s leading cryptocurrency exchange, has experienced a substantial loss in market share to global competitors that do not support the U.S. dollar this year.

In 2022, Binance concluded with a dominant 75% market share among a group of platforms, including major Asian players like Upbit, Huobi, Bybit, and OKX. However, this figure steadily declined throughout the year, dropping to 54% by August, according to data from The Block Research. Incomplete data for September suggests that Binance’s market share will further decrease to under 51%.

Binance, headed by Changpeng Zhao, faced a challenging year on the regulatory front, notably in the U.S., where it was sued by both the Securities and Exchange Commission and the Commodity Futures Trading Commission. Regulatory scrutiny extended to other regions like France, where Binance is under investigation, prompting the exchange to exit certain markets, such as The Netherlands.

In May, Binance underwent undisclosed layoffs from its once 7,000-strong workforce, citing the need to allocate resources in alignment with evolving user and regulatory demands.

Justin d’Anethan, Head of Business Development in the Asia Pacific for Keyrock, a market maker, expressed suspicion that both retail and institutional investors have reduced their exposure due to the regulatory challenges Binance faced in the U.S. and globally. This situation has inadvertently benefited other exchanges that, ironically, may not be more compliant but are currently less in the regulatory spotlight.

The decline in Binance’s market share is concurrent with an overall decrease in trading volumes across the industry. Spot volumes across all exchanges amounted to just $423 billion in August, marking the lowest figure since 2020.

Ben Caselin, Chief Strategy Officer at MaskEx, emphasized that the recovery of trading volumes will depend on market favorability and Binance’s success in securing regulatory clearance in the jurisdictions it operates. He anticipates that investors and crypto traders will increasingly seek licensed exchanges or decentralized trading venues if they prefer self-custody.

While the precise cause of the dip in Binance’s market share is challenging to pinpoint, Steven Zheng, Director of Research at The Block Research, noted that Binance initiated a zero-fee bitcoin trading campaign in July 2022, coinciding with its efforts to gain more market share.

Amid Binance’s decline, Huobi and Upbit have gained traction, with the latter now constituting 14.5% of trading volumes.