Binance has seen its market share drop by 25% in the past three months as it faces mounting regulatory pressure from US regulators.
The world’s largest cryptocurrency exchange accounted for 57.5% of the average monthly volume of all crypto transactions in February, the Financial Times reports, citing research provider CCData, but its market share has now fallen to 43%.
Increased regulatory scrutiny in the US and the end of introducing no-fee trading are among the main reasons for the downturn in the Binance stock market.
Earlier this year, regulators in New York stopped issuing BUSD, a Binance-branded stablecoin that accounts for 40% of the company’s monthly trading volume.
“The end of the BUSD offering affected the liquidity of the exchange, which put more pressure on Binance, as the brand’s stablecoin was in the media and they had to abandon it,” said Ilan Solot, Co-Chair. London-based financial services group Marex Digital Assets.
In March, the Commodity Futures Trading Commission (CFTC) announced that it had filed a lawsuit against Binance and its founder, Changpeng “CZ” Zhao, for knowingly providing crypto derivatives that were not registered in the United States in violation of the law.
After this news, Binance saw a massive outflow of $2.2 billion.
The market share of other crypto exchanges will increase
Meanwhile, the market share of other exchanges, including Huobi, OKX, BitMex, Bybit, and Bullish, has increased since March.
According to Keiko data, Huobi increased its market share by 8% and OKX increased by 4%. The share of South Korean exchanges increased from less than 8 percent to 14 percent.
Binance is said to be planning to reduce its workforce in response to declining market share.
However, the platform’s chief communications officer denied rumors that it would cut 20% of its workforce, instead re-evaluating whether the company had “the right talent and skills in key roles.”
After Hillman joined Binance, the company underwent a “capacity density audit and resource allocation exercise every six months or so. It’s a cyclical process.”
The decline in Binance’s market share can be attributed to the current state of the crypto market, where the value of tokens like Bitcoin is down 70% from its all-time high.
Besides Binance, it is worth noting that several major crypto companies have terminated their workforce, including Coinbase, Crypto.com, Bybit, Kraken, Gemini, and others.