Despite holding onto its crown as the top crypto exchange worldwide by trading volume, Binance has seen a steep tumble in its market slice after facing fraud allegations from a U.S. watchdog and ditching zero-fee trading on certain pairs.
Data from analytics firm Kaiko reveals Binance’s share of total trading volume dropped from a robust 70% just a fortnight ago down to 54%. This figure marks its lowest point since November 5 and represents the smallest consistent market hold since August, Kaiko’s report highlights.
The CFTC Lawsuit and Its Ripple Effects
On March 27, the U.S. Commodity Futures Trading Commission (CFTC) slapped Binance and its founder Changpeng Zhao with a lawsuit, accusing them of offering crypto derivatives products without proper registration, which stands in violation of federal statutes.
Coinciding with this legal setback, Binance also recorded its slowest bitcoin (BTC) trading day since July 2022 after discontinuing its zero-commission trading initiative across 13 bitcoin spot pairs. “The surplus trading volume driven by the zero-fee model evaporated, resulting in a more balanced spread of market share among competing exchanges,” according to Kaiko’s analysis.
Regulatory Pressure Tightens Grip on Crypto Exchanges Worldwide
Kaiko points out that as regulators intensify scrutiny on international exchanges, the U.S. crypto landscape remains particularly vulnerable, placing additional strain on platforms still operating in this jurisdiction.
Shifts in U.S. Market Shares Among Crypto Exchanges
- Coinbase (COIN) saw a decline in its U.S. market foothold during Q1, dropping from a weekly average of 60% to 49%.
- Meanwhile, Binance.US capitalized on this shift, climbing from 8% to 24% market share over the same period, according to Kaiko.
As the crypto sector navigates mounting regulatory challenges and evolving fee structures, exchanges’ market dynamics are rapidly reshaping, signaling a new era of competition and compliance.
