The Binance exchange is reportedly experiencing a falling spot market share for the seventh consecutive month. The figure accounted for 34.3% in September, which is a drop from August’s 38.5%, as per Bloomberg.
Citing analysis from cryptocurrency data provider CCData, the report revealed that Binance’s spot market share has been on a decline since February this year. January’s share in 2023 stood at 55.2%.
Along with the spot market, Binance has also been struggling in the derivatives market’s share. This figure saw a fall from 53.5% in August to 51.5% in September. At the start of this year, the exchange’s market dominance in the derivatives market accounted for more than 62%.
While its ongoing regulatory issues in the United States is an apparent reason for the same, CCData research analyst Jacob Joseph believes it to not be the only reason the exchange has lost its market share. He believes that Binance’s decision to halt its zero-fee trading promotion for major trading pairs has also contributed to this decline.
Recently, the exchange was seen stopping its services in some of its key markets this year. Binance announced its full exit from Russia in the month of September. In doing so, it sold its entire local business to the newly launched CommEx exchange, founded by undisclosed entities.
As stated by Binance chief compliance officer Noah Perlman, the exchange recognised that operating in Russia was no longer compatible with Binance’s compliance strategy. The country was one of the biggest markets for Binance.
According to data from SimilarWeb, Russia stood top in terms of user visits for the website Binance.com, accounting for 6.9% of total visits at the time of writing. The decision seemed to come on the back of the major regulatory challenges it faced in compliance with Western sanctions against Russia following its war with Ukraine.
Last month, the exchange modified its zero-fee Bitcoin trading program. This required the re-application of a regular taker fee based on user’s VIP level. Binance then started changing a 0.1% taker fee on spot and margin trades from regular users.
As per analysts, the action had the potential to initiate a significant market downturn, echoing the 90% trading volume decline observed following Binance’s discontinuation of zero-fee trading in March.
Its competitor exchanges like OKX, Bybit and Bitget have reportedly also picked up market share in derivatives, said the report. On the other hand, Binance’s lost spot trading volume has been distributed among exchanges like HTX (formerly Huobi), Bybit and DigiFinex.
The falling market share comes amidst the ongoing regulatory hurdles faced by the exchange in the United States. Recently, Binance, along with its CEO Changpeng ‘CZ’ Zhao, filed a motion for the dismissal of the charges brought against them by the US Securities and Exchange Commission (SEC).
According to this filing, the regulatory watchdog “overstepped its authority” in pushing the lawsuit. It claimed SEC to have failed in setting out proper regulatory guidelines to the crypto industry before bringing the suit against the world’s biggest exchange.
The filing also added that the regulator sought to enlarge its jurisdiction globally to include transactions on foreign cryptocurrency platforms, defying Supreme Court precedent holding that the agency’s regulatory authority ends at the US border.
