Binance has seen its market share decrease by 25% over the past three months amid increasing regulatory pressure from US regulators.
The world’s largest cryptocurrency exchange had 57.5% of the average monthly volume of all crypto trades in February, but its market share has now dropped to 43%, Financial Times informed ofCiting research provider CCData.
Increased regulatory scrutiny in the US as well as the end of zero-fee trading incentives are cited as the main reasons for Binance’s market share decline.
Earlier this year New York regulators also Stopped The issuance of a Binance-branded stablecoin called BUSD accounts for 40% of the company’s monthly trading volume.
“The end of the BSD issuance has had an impact on the amount of liquidity on the exchange, adding to the pressure on Binance knowing that their branded stablecoin was in the media and they were forced to abandon it,” Ilan Solot , said co-head of digital assets at London-based financial services group Marex.
In March, the Commodity Futures Trading Commission (CFTC) announced that it is suing Binance and founder Changpeng “CZ” Zhao over allegations that the crypto exchange knowingly offered unregistered crypto derivative products in the US in violation of the law.
Following the news, Binance observed whopping $2.2 billion in outflow.
Market share growth of other crypto exchanges
Meanwhile, other exchanges including Huobi, OKEx, BitMEX, Bybit and Bullish have seen their market share increase since March.
According to data from Caco, Huobi has increased its market share by 8% while OKEx has gained 4%. South Korean exchanges saw their share rise from below 8% to nearly 14%.
In response to declining market share, Binance is reportedly planning to reduce its workforce.
However, the platform’s chief communications officer denied the rumors that it is cutting 20% of its workforce, and instead represents this as a reassessment of whether the company “has the right talent and expertise in key roles”.
Hillman said that since joining Binance, the company has “regularly gone through a talent density audit and resource allocation exercise every six months. It’s a cyclical process.”
“Like previous exercises, this will be done after multiple teams (including HR, risk and operations) finalize that talent density audit. There is no specific number, just direction as to where we need to streamline. It is clear has always been part of Binance’s secret sauce.”
The decline in Binance’s market share can also be attributed to the current crypto market conditions, with tokens such as bitcoin falling in value by almost 70% compared to their all-time highs.
It is worth noting that apart from Binance, several major crypto companies have already cut their workforce, including coinbaseCrypto.com, Bybit, Kraken, Gemini, and more.