Cryptocurrency exchange Binance's dominance of trading volume market share has shrunk over the past two weeks following a lawsuit by the United States commodities regulator and its decision to halt some zero-fee transactions.
on a 4th of april Newsletter Blockchain analytics platform Kaiko reported that Binance “lost 16% market share of trade volume,” with a 54% market share at the end of Q1.
The US Commodity Futures Trading Commission (CFTC) sued Binance on March 27 alleging that it breached regulatory compliance by violating derivatives laws by offering trades to US clients without registration.
Kaiko said that Binance still receives more volume than the rest of its competitors combined, but its March 15 decision to end spot trading and zero fee margin for 13 trading pairs, including BNB (bnb), Bitcoin (BTC) and ether (ETH) trading pairs with multiple fiat currencies and stablecoins contributed heavily to the downfall of the company.
“Overall, Binance's excess volume largely disappeared with the end of zero-fee trading, which was reflected in an even dispersion of market share across the remaining exchanges,” Kaiko reported.
Kaiko explained that part of this drop was eased by its US arm, Binance.US, which managed to triple its market share during the quarter from 8% to 24%.
However, Binance did not fall excessively across all domains, the exchange managed to maintain its derivatives dominance, giving up just 2% of market share during the last quarter.
Kaiko explained that the drop in trading volume figures was primarily influenced by the end of zero-fee spot trading rather than the CFTC's lawsuit:
“The trend is quite different when looking at derivatives volumes: Binance only lost around 2% market share for perpetual futures trading volume. This suggests that most of the market share was lost simply due to the end of zero fee spot trading, rather than fears of a lawsuit.”
The market share drop to 54% comes as Binance was one of the “big winners” from the FTX fiasco, which saw its market share in trading volume rise to 65% during the last quarter of 2022:
“Binance's market share increased from 50% to 65% after November 2022, while OKX saw its market share increase from less than 10% to 17%. Bybit and the three smallest exchanges, Huobi, Bitmex and Deribit, on the other hand, saw their market share decline.
Over the past quarter, Upbit was the only cryptocurrency exchange to regain a “significant share” of trading volume across the 17 trading platforms Kaiko analyzed.
Related: DEXs growing faster than CEXs, but Binance still sees 171 million visitors in a month
In light of recent regulatory pressures, banking crises, and the catastrophic collapse of FTX, many reports have noted an increasing trend toward decentralized alternatives and self-custody wallets.
bitcoin and ether centralized exchanges left in record numbers after the fall of FTX. The daily trading volume of decentralized perpetual exchanges also reached $5 billion in November 2022, the most since the Terra Luna Classic (far) and your connected TerraClassicUSD (USTC) the stablecoin collapsed in May 2022.
Trading volumes in the Uniswap decentralized exchange they now rival cryptocurrency exchanges Coinbase and OKX, but are still only a fraction of the size processed by Binance.
Magazine: Can You Trust Crypto Exchanges After FTX Crash?
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