According to the data from The Block Research, Binance completed the year 2022 with a significant market share of 75% among a group of major Asian centralized competitors, including Upbit, Huobi, Bybit, and OKX. However, the current data shows that this market share dropped to 54% in August.
Unfinished data for September indicates that Binance’s market share further declined below 51%. Market observers and experts believe that regulatory pressure, especially in jurisdictions such as the United States, will continue to decrease Binance’s market share.
Under the management of Changpeng Zhao (CZ), the cryptocurrency exchange giant had a challenging year in terms of regulatory issues, particularly in the United States, where it faced lawsuits from both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Additionally, Binance withdrew completely from markets like the Netherlands and faced investigations in markets such as France.
In May, Binance laid off an undisclosed portion of its once 7,000-strong workforce, stating that the decision was made to allocate resources appropriately to reflect the evolving demands of users and regulators.
Justin d’Anethan, the Asia Pacific Business Development Manager at market maker Keyrock, expressed skepticism that both individual and institutional investors would “move away from some of the risks that Binance faces in the US and even globally due to regulatory hurdles” and added, “This situation definitely benefits upcoming exchanges, which ironically are less scrutinized despite being more incompatible with regulations.”
The decline in Binance’s market share is also following a decrease in trading volume across the market. Spot volumes across all exchanges reached only $423 billion in August, the lowest figure since 2020.
Ben Caselin, the Chief Strategy Officer at MaskEx, commented, “As the markets become favorable, we will need to see how these volumes can recover. The increase in Binance’s volume will definitely depend on its ability to obtain regulatory permission in every country it wants to operate in, as jurisdictions are generally taking steps either through enforcement or policy-making. In the coming months, we can expect investors and crypto traders to seek more licensed exchanges, turn to self-custody, or move towards decentralized trading platforms.”