Binance Market Share Declines Amid Regulatory Challenges, US Affiliate Also Impacted

The year has been challenging for Binance, the world’s leading cryptocurrency exchange, and its U.S. counterpart, Binance.US. Both have considerably reduced their market shares due to increased regulatory scrutiny across various global jurisdictions.

A notable setback came from a lawsuit the U.S. Securities and Exchange Commission (SEC) filed against the company alleging regulatory violations. Data from analytics firm Kaiko indicates this lawsuit contributed to Binance’s global market share dipping from 60% at the beginning of the year to 52% as of last month.

Binance’s Strategy Adjustment And Its Market Impact

Binance’s decision in March to discontinue zero-fee transactions for certain trading pairs might have played a role in the market share decline, suggests Dessislava Aubert, an analyst at Kaiko. As Binance’s share recedes, other exchanges like Bybit and OKX have benefited.

Aubert noted: “Binance’s market share has spread to various exchanges, with Bybit and OKX faring best.” Binance.US, described as an independent partner of Binance, is also experiencing market turbulence.

The SEC’s move to request a court-imposed asset freeze triggered a sharp reduction in Binance.US’s market share. From commanding over 22% of the U.S. market in April, the exchange’s share had plummeted to 0.9% by June 26.

Coinbase Capitalizes Amid Regulatory Turmoil

While Binance and its U.S. affiliate faced challenges, Coinbase, another significant player in the market, has seen an upswing. The U.S. market share of Coinbase rose to 55% in June from 48.4% previously.

Aubert mentions that this surge came after Fidelity and other asset managers chose the exchange as a surveillance partner for filing a spot Bitcoin ETF.

Notably, crypto companies continue to dispute the SEC’s assertion that crypto tokens are securities and have repeatedly requested the creation of clear rules. According to Kaiko, it wasn’t only Binance feeling the heat. The entire crypto market endured a tough second quarter, with spot trade volumes shrinking to their lowest level since 2020.

Despite these market woes, Bitcoin rallied towards the end of the quarter, achieving a one-year peak above $31,000. This rally was attributed to multiple proposals from prominent asset managers, including BlackRock, boosting overall market sentiment.

Veering back to Binance, on Tuesday, the Australian Securities and Investments Commission (ASIC) visited the exchange offices. This is part of a continuing inquiry into the company’s now-closed local derivatives operations.

Particularly, this recent event exacerbates the increasing pressure on Binance, navigating various regulatory obstacles worldwide. Meanwhile, amid the negative news surrounding Binance, the exchange native token, BNB has reacted to the downside, as seen below.

Over the past week, the asset has surged 3.4% and has only seen a 0.9% loss in the past 24 hours. BNB currently trades at $239.70 at the time of writing with a trading volume of $676.8 million.

Featured image from iStock, Chart from TradingView