Binance Struggles to Regain Market Share, Remains at Yearly Low

Binance, the cryptocurrency exchange platform, is currently facing the impact of increased regulatory scrutiny, leading to a decline in its market share that is now hovering close to a one-year low, according to research firm Kaiko.

Data from Kaiko reveals that Binance’s spot trading market share remained largely unchanged at 56% until June 19, consistent with the preceding two months. However, this figure represents the lowest market share for Binance since August, when it had fallen to 53.7%, as reported by Kaiko.

The recent lawsuit filed by the US Securities and Exchange Commission (SEC) against Binance and its founder, Changpeng Zhao, on June 5 has dealt a significant blow to the world’s largest cryptocurrency exchange.

Binance’s daily market share sees a sharp drop

Binance’s daily market share experienced a sharp decline, reaching as low as 47% on April 6, following a separate lawsuit filed by the US Commodity Futures Trading Commission (CFTC). The pressure on crypto exchanges, including Binance, has intensified with the entry of well-established traditional finance players like BlackRock Inc., which have sought regulatory approval to offer spot Bitcoin exchange-traded funds, attracting investors seeking regulated institutions.

Alex Svanevik, the CEO of crypto intelligence firm Nansen, remarked that centralized exchanges are facing increasing competition from decentralized exchanges and traditional finance players entering the market, which puts them in a challenging position.

Coinbase, a US-based exchange also facing legal action from the SEC, has witnessed a decline in its market share from 7.6% in January to 6.8% in June. Binance’s US entity has suffered a substantial loss of market share following lawsuits from both the CFTC and the SEC, according to Kaiko’s data. Furthermore, Binance’s trading share in euro pairs has also experienced a notable drop.

In addition to regulatory challenges, Binance’s market share has been impacted by the discontinuation of a popular zero-fee promotion in March. However, the exchange recently announced a new promotion for stablecoins, scheduled to commence on June 30, including True USD, BUSD, Tether’s USDT, and Circle’s USDC.

A spokesperson for Binance emphasized the company’s commitment to maintaining strong financial performance while prioritizing the development of products and services, as well as investing in compliance processes to navigate the evolving regulatory landscape.

Binance is not alone in experiencing market share declines, as overall global trading volume has contracted across various crypto exchanges due to the negative impact of regulatory challenges on investor sentiment.