Binance Loses Global Crypto Trading Market Share as Regulations and Competition Tighten

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Binance, a prominent player in the global cryptocurrency exchange market, is experiencing a decline in market share. This downturn can be attributed to several reasons: the ongoing evolution of crypto regulations and Binance’s decreased focus on affordable trading. The exchange no longer promotes its cost-effective trading strategy.

Binance’s Market Share Is Falling

Based on data from research firm Kaiko, Binance’s dominance in Bitcoin trading decreased from 81.3% to 55.3% within the past year. Similarly, their market share for altcoins dropped from 58% to 50.5%. Kaiko’s analysts stated in a recent report that the offshore markets have become less centralized, and smaller local exchanges are experiencing significant growth, making it challenging for major players like Binance. Additionally, Kaiko attributes a significant portion of this decrease to Binance’s decision to discontinue their zero-fee trading promotion.

Outside of the United States, other cryptocurrency exchanges are broadening their impact and capturing more market shares. According to Kaiko, over the past year, the proportion of Bitcoin trades outside the US on OKX grew from 3% to 7.3%. Bybit experienced a greater surge, with its non-US Bitcoin trading increasing from 2% to 9.3%.

Binance’s market share plunge may also stem from several regulatory problems the exchange has faced over the years. Last November, co-founder and former CEO Changpeng Zhao agreed to step down as CEO after pleading guilty to federal money laundering charges. Binance was accused of commingling user funds, and allowing US customers to trade on the global exchange, against US law. Furthermore, Binance allegedly made employees ignore illicit trades among VIP customers.

Unfortunately, Binance’s regulatory troubles in the US have caused ripples globally as various authorities approach with caution. Last week, Dubai authorities issued a full Virtual Asset Provider (VASP) permit to Binance FZE, Binance’s local entity. However, approval was delayed until Changpeng Zhao, Binance’s CEO, relinquished voting control over the entity. It is said that regulators demanded this concession due to Binance’s ongoing regulatory concerns.

More Regulatory Problems

Binance encountered similar issues in South Korea, leading to a decrease in its market presence. In February 2022, Binance obtained a significant share of local cryptocurrency exchange Gopax due to operational troubles the latter was experiencing. Binance aimed to re-enter South Korea through Gopax after departing in January 2021. Additionally, Binance acquired stakes in other domestic exchanges as part of its strategy. However, recent reports indicate that Binance intends to leave the market once more due to a less than favorable regulatory climate. The company is currently planning to dispose of its Gopax ownership.

Regulators in Asian markets have been proposing more stringent regulations for crypto services lately, which some companies like Binance find objectionable. For instance, the Hong Kong Virtual Asset Exchange (HKVAEX), which started operating in Hong Kong last year after setting up shop in December 2022, has since withdrawn its application to operate there.

BX Services Limited introduced a new exchange separately, but there are indications of a connection to Binance despite their denial. Some signs of this link include sharing the stage at cryptocurrency conferences and the use of Binance’s servers by HKVAEX.

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2024-04-23 14:15