In a major setback for Binance.US, the United States-based cryptocurrency exchange has witnessed a significant decline in its market share, dropping over 20% amidst an ongoing lawsuit from federal financial regulators.
The SEC filed a lawsuit in June, accusing Binance.US, Binance, and CEO Changpeng “CZ” Zhao of being an unregistered securities exchange. In March, the Commodity Futures Trading Commission also sued the exchange and CZ for the same reason.
According to a report, recent data from Kaiko, a leading data provider, reveals that Binance.US’s market share in the U.S. plummeted from a commanding 22% in April to a meager 0.9% as of June 26.
On the other hand, Coinbase, a rival of Binance.US, has observed a different trajectory. Despite being confronted with an SEC lawsuit similar to Binance.US, Coinbase encountered a notable upswing in its market share within the United States, with an approximate 7% surge recorded in June.
According to the report, Coinbase experienced a significant increase in its market share, surging from approximately 48% to 55% within the specified timeframe. Analysts credit this growth to Coinbase’s collaboration as a surveillance partner with asset managers aiming to introduce a Bitcoin exchange-traded fund (ETF) focused on spot trading in the United States.
This partnership likely contributed to the increased confidence and trust in Coinbase as a reliable cryptocurrency exchange.
Binance’s Global Market Share Declines
On a global scale, the world’s largest cryptocurrency exchange has experienced a decline in its market share as well. Data from Kaiko indicates that Binance’s global market share decreased from 60% at the beginning of the year to 52% following the SEC lawsuit.
This decline started in March when Binance discontinued zero-fee transactions for select trading pairs, prompting traders to migrate to alternative platforms. Bybit and OKX emerged as the primary beneficiaries, capturing a significant portion of the market share that Binance relinquished.
The regulatory scrutiny and subsequent decline in market share raise important questions about the future of cryptocurrency exchanges and the need for clear regulatory frameworks.
Crypto companies argue against classifying crypto tokens as securities and have repeatedly urged the SEC to establish unambiguous guidelines.
This ongoing legal battle and the regulatory crackdown have also impacted spot trade volumes, which experienced a significant slump in the second quarter, reaching their lowest levels since 2020.
Nevertheless, as the legal battles continue, the outcomes of these lawsuits and the subsequent regulatory decisions will undoubtedly shape the future of cryptocurrency exchanges and their market shares.
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