Binance’s Dominance Slips: What’s Behind the Fall?

• Binance’s share of trading volume on centralised exchanges was a staggering 66% at the end of 2021, but has since dropped to 43%.
• This dropoff follows a turbulent few months for Binance, with the SEC shutting down the BUSD stablecoin and the CFTC charging them for an „intentionally opaque common enterprise“.
• Binance is also facing layoffs due to market conditions and lack of transparency concerns.

Binance’s Market Share Decline

Binance had a dominant 66% share of trading volume on centralised exchanges at the end of 2021, however this has since dropped to 43%. This decline is largely attributed to regulatory issues that occurred in February 2023 when both the SEC and CFTC charged Binance with violations. Furthermore, market conditions have resulted in layoffs for the company and concerns over lack of transparency have caused further worry.

Regulatory Issues

In February 2023, the SEC shut down BUSD, a stablecoin issued by Paxos which was domiciled in New York. This accounted for over one third of total trading volume on Binance, making it an integral part of liquidity on their exchange. Shortly after this incident, The CFTC charged both Binance and high level executives including CEO Changpeng Zhao for leading an “intentionally opaque common enterprise”. The complaint alleges that they were manipulating prices and conducting unauthorised trades.

Market Conditions & Lack Of Transparency

The bear market has had many businesses across the cryptocurrency industry feeling its effects. As a result, Binance is planning a round of layoffs as well as dealing with lack of transparency concerns from market participants. These worries are mainly due to their opaque business model which allows them to operate without much oversight or regulation from authorities or other parties involved in cryptocurrency trading operations.

Competitor Performance

Despite capital fleeing from crypto overall during 2021, Binance managed to gain more market share during this time period compared to other major exchanges (with ByBit being the exception). Coinbase came in second place with 8.2%, far behind Binance’s 48%.

Conclusion

Binance is still one of largest cryptocurrency exchanges despite dropping market share throughout 2023 due to regulatory issues such as those mentioned above as well as lack transparency concerns and a bearish atmosphere in crypto markets leading up to layoffs at the company. Despite these obstacles however, they remain highly competitive in comparison their rivals who have not been able too keep up with them over recent months.