Binance Market Share Drops Amid Regulatory Pressure and Fee Changes
Binance has reportedly taken a hit in its share of the global cryptocurrency spot market.
From the beginning of the year, Binance’s share of spot trading plunged by 17 percentage points, from 90% to 73%, Bloomberg reported Tuesday (July 18), citing data from cryptocurrency market data provider Kaiko.
At the same time, other offshore platforms are capitalizing on Binance’s marketplace vulnerability, according to the report. The data reveals that OKX’s market share nearly doubled from January, rising to 11%, while in the same period, Huobi and Bybit also increased to 9% and 7%, respectively, of global spot crypto trading volume.
The report attributed Binance’s decline in market share in part to the new and more stringent regulatory environment in the United States, including lawsuits filed against the company by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
The SEC filed 13 charges against Binance and its founder Changpeng Zhao on June 5, alleging a variety of securities law violations. The SEC’s charges include operating as unregistered exchanges, brokers, dealers and clearing agencies; making unregistered offers and sales of crypto assets; failing to restrict U.S. investors from accessing Binance.com; and misleading investors.
Binance responded with a blog post saying it is “disappointed” with the SEC’s decision because Binance has cooperated with the regulator’s investigations, worked to address its concerns and aimed to reach a negotiated settlement.
On Sunday (July 16), it was reported that Binance has cut jobs and dealt with a wave of executive departures amid the increased pressure from regulators.
Binance’s market share was also hurt by the end of its zero-fee trading programs, Clara Medalie, director of research at Kaiko, told Bloomberg.
Seeking Alpha reported in March that when Binance stopped most zero-fee trading, the trading volume on the platform sank to its lowest level over the weekend since July 2022.
In another factor impacting share of the global cryptocurrency spot market, Binance’s competitors — OKX, Huobi and Bybit — generally cater to the Asia market and have been the beneficiaries of a friendlier regulatory environment in Hong Kong, according to the Bloomberg report.
“Ever since Hong Kong loosened digital asset restrictions, the exchanges have taken advantage of the friendlier regulatory environment,” Medalie said in the report.
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