The world’s leading cryptocurrency exchange Binance is losing the lead over competitors as ramping regulatory pressure curbs growth.
According to an Oct. 3 report by data provider CCData, in September Binance processed just 36.6% of centralized crypto exchange volume for spot and derivatives. This means that Binance had only a 22% market share lead over its closest competitor OKX.
Binance’s spot trading volume fell by over 20% over the last month when the exchange held only 27% of the spot market. This is the weakest chokehold on the spot crypto trading market that the company has seen since September 2020.
When it comes to derivatives, Binance is faring a bit better. Last month Binance held a nearly 41% market share following a fall of over 20%. The closest competitor, OKX, held 18.4% of the derivative market, followed by Bybit, 15.3%.
Binance’s clash with regulators
Binance’s lead over competitors follows the centralized cryptocurrency trading market shrinking. The aggregate volume of both the spot and derivative segments of this market fell to $4.3 trillion in September, 17% less than the previous month.
The data follows Binance’s clashing with regulators worldwide. Last year, the exchange had to leave the Netherlands following the company’s attempts to secure a virtual asset service provider. The local regulator also fined Binance $3.35 million for offering its services without complying with local registration requirements.
This was followed by Binance leaving the German market less than a month after withdrawing its crypto license application. Around the same time, Binance also applied to pull out of Cyprus, according to a listing with the Cyprus Securities and Exchange Commission.
This last decision preceded the European Union’s — of which Cyprus is a member — introduction of its Markets in Crypto Assets (MiCA) legislation. Those regulations are much stricter than the previous framework, and many expect them to give an edge to traditional finance institutions.
In September major stock and cryptocurrency exchange Robinhood and banking app Revolut considered entering the stablecoin market. An anonymous person with knowledge of the matter suggested that the firms expect increasingly strict regulations to loosen Tether’s chokehold on the stablecoin market.
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