Legal issues facing Binance, the world’s largest crypto exchange, have allowed other exchanges to increase their market share, new data shows.
Following Binance’s $4 billion settlement with the US government and its former CEO’s admission that he violated anti-money laundering (AML) laws, Coinbase and Bybit have gained ground in the crypto trading industry, analytics firm Kaiko reveals.
Kaiko say News of the Binance settlement added fuel to the fire of Coinbase’s already strong November.
“Coinbase was already in the middle of a strong month when the news broke, and the news seemingly only added fuel to the fire, sending the stock up 75% in one month. The prevailing narrative is that the bear market is thawing, and Coinbase will be a major beneficiary of this change in circumstances.”
Kaiko says Binance has ceded some market share to Coinbase during non-US trading hours and to Bybit across the board.
While the charges against Binance are largely seen as negative for the company, Kaiko says an argument can be made that Binance has now removed any uncertainty about the exchange and could allow for a clearer future.
“It is too early to make sweeping predictions, but the first trends, far from looking bad for Binance, are also promising for Coinbase and Bybit. This competition developed an interesting wrinkle this week in the form of an email from Coinbase to customers, informing them that Coinbase had received a subpoena from the CFTC (Commodity Futures Trading Commission) regarding Bybit.
While the most popular theory is that Binance will lose market share to other exchanges, it is also possible that its compliance monitor and improved AML/KYC (know-your-customer) procedures will increase confidence in the exchange, thereby maintaining its share . While you could argue that centralized exchanges are perfect substitutes, the turbulence of the past few years has shown that there is some persistence in terms of liquidity and volumes; people tend to want to continue using the exchanges they already use.
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Generated image: Midjourney
