Binance Ends Zero-Fee Trading, Market Share Drops: Kaiko Report
TL;DR Kaiko’s Q2 report covers how the SEC lawsuit affected Binance. The exchange’s market share in the spot market and derivatives fell due to the introduction of trading fees, redistributing market share among various exchanges. The SEC also accused Binance and Coinbase of offering unregistered securities, resulting in a decrease in liquidity for top tokens. Kraken’s liquidity was comparatively better and its spreads were tighter than those of Coinbase and Binance.US.
The cryptocurrency exchange giant Binance has been facing a series of challenges in recent times, with regulatory actions and market share shifts impacting its position in the industry. Digital asset data provider Kaiko has released a Q2 report addressing the impact of the scrutiny on Binance.
The Securities and Exchange Commission (SEC) filed lawsuits against Binance, Binance.US, and Binance CEO Changpeng Zhao in June, garnering media attention. The allegations included claims that they were operating an unregistered securities exchange, broker-dealer, and clearing agency.
One particularly attention-grabbing accusation was the involvement of a trading firm/market maker owned by Changpeng Zhao in wash trading on Binance.US, particularly preceding its seed funding in September 2021.
💥Introducing: Kaiko's Q2 Report 💥
The SEC continued their crackdown, this time targeting the world’s largest exchanges. In our latest report, we cover:
👉 https://t.co/pup2WYms9R liquidity
👉 #CRV lending on AAVE
Market Share Shifts and Trading Volume Surge:
Recent data from a report by Kaiko highlights the significant changes in Binance’s market share. The reintroduction of trading fees for BTC-USDT and BTC-BUSD spot pairs led to a decline in Binance’s market share of spot volumes, dropping from 64% to 53%.
This shift resulted in a redistribution of market share among various exchanges, with Bybit and OKX emerging as the top performers. Coinbase, another major player, also experienced a decline in market share, falling from 8% to 5.4%.
The Impact on Binance’s Derivatives Trading
Binance’s market share in derivatives has been steadily declining throughout 2023, and the situation worsened with the initiation of a case by the Commodity Futures Trading Commission (CFTC) against Binance’s futures markets.
The exchange struggled to maintain the same market share it had at the end of the previous year, starting with 66% of perpetual volumes. However, Binance’s market share has declined by almost 10% year-to-date, currently standing at 56%.
The allegations by the SEC don’t end there. The commission also alleged that Binance and Coinbase were involved in offering unregistered securities. The SEC also branded 20 tokens as securities. The Kaiko report also reveals how the SEC’s charges affected market liquidity as a whole.
Exchanges like Bittrex, Binance.US, and OKCoin witnessed a considerable drop in market depth for the top 10 tokens. The percentage change in market depth stands at 68% for Bittrex and 85% for Binance.US and OKCoin.