- Binance market share has dwindled from 75% to 54% in 2022 and further to below 51% in September.
- Regulatory pressures, particularly in the United States, have significantly contributed to Binance’s market share decline.
Binance Market Share Erosion
In a significant shift, Binance, the cryptocurrency exchange giant, has seen its market share dwindle from 75% to 54% throughout the course of 2022, according to data from The Block Research. The drop in market dominance has extended even further in September, with the latest figures indicating that Binance’s market share now stands at below 51%.
Regulatory Pressures Take Their Toll
The decline in market share can be attributed to mounting regulatory pressures, particularly in jurisdictions like the United States, where Binance has found itself entangled in legal battles with both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Furthermore, the exchange giant has withdrawn entirely from certain markets, including the Netherlands, and faced investigations in countries like France.
Under the leadership of Changpeng Zhao (CZ), Binance underwent a challenging year, leading to significant operational changes. In May, the exchange made the decision to lay off an undisclosed number of employees from its once 7,000-strong workforce. The rationale behind this move was to allocate resources effectively in response to evolving user demands and increasingly stringent regulatory scrutiny.
A Boon for Emerging Exchanges
Market observers and experts anticipate that Binance’s regulatory hurdles in the US and globally will continue to affect its market standing. Justin d’Anethan, the Asia Pacific Business Development Manager at market maker Keyrock, expressed skepticism about both individual and institutional investors sticking with Binance given its regulatory challenges. He noted that this situation presents an opportunity for emerging exchanges, which, ironically, face less scrutiny despite potentially being less compliant with regulations.
The decline in Binance market share coincides with a broader decrease in trading volume across the cryptocurrency market. In August, spot volumes across all exchanges reached their lowest point since 2020, standing at just $423 billion.
Ben Caselin, the Chief Strategy Officer at MaskEx, emphasized the significance of regulatory compliance for Binance’s future growth.
He remarked, “The increase in Binance’s volume will definitely depend on its ability to obtain regulatory permission in every country it wants to operate in, as jurisdictions are generally taking steps either through enforcement or policy-making. In the coming months, we can expect investors and crypto traders to seek more licensed exchanges, turn to self-custody, or move towards decentralized trading platforms.”