A representative of the company Kaiko, which provides information about digital assets, announced a significant reduction in the share of the Binance crypto exchange in the spot market over the past week.
Despite a strong start to 2023 for Binance and its market leadership position in 2022 with over 70% market share, it has not been able to maintain this position.
Binance Spot Market Share Drops Amid Regulatory Action
Kaiko experts believe that the US financial regulators played an important role in reducing the share of Binance. The New York City Department of Financial Services (NYDFS) has requested Binance to stop issuing its own stablecoin BUSD, and the Securities and Exchange Commission (SEC) has launched an investigation into the operations of Paxos, the issuer of the stablecoin.
In addition, the Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance and its CEO, Changpeng Zhao, for evading federal laws and operating an unregistered digital asset derivatives exchange. The lawsuit led to an outflow of funds from Binance as investors and traders began to fear the worst-case scenario.
Analysts suggest that it will be difficult for Binance to regain its dominant position in the near term, and US exchanges, including Coinbase, may absorb some of the spot volume of US institutional clients that are leaving Binance. Clients can also switch to other popular crypto exchanges such as Bybit, Deribit or OKX, which will capture some of the Binance derivatives volume.
On Monday, April 3, an appeal was filed by law firms Moscowitz and Boies Schiller Flexner in the Southern District of Florida in the amount of about $1 billion against Binance and its founder.
