Rise of the Crypto Underdogs: ‘Low Tier’ Exchanges Gain Market Share after Binance Falters

<p>Regulatory
and legal troubles that Binance faced in the United States (and globally) have led to a
significant drop in the crypto market giant's share. Surprisingly, the main
beneficiaries of this situation were not the exchange's main competitors, but
smaller platforms whose share in total volumes has grown considerably since the
beginning of the year.</p><p>Where Binance Loses,
Smaller Exchanges Benefit</p><p>According
to data presented by CCData, exchanges located in Seychelles, including KuCoin
and Huobi Global, have benefited from Binance's decline in popularity. </p><p>CCData
classifies cryptocurrency platforms based on the minimum acceptable risk
threshold. Riskier exchanges are categorized under 'low tier', while those
posing less risk to their clients are labeled 'top tier'. In establishing these
categories, the crypto data provider considers the exchanges' approach to client
fund protection, safeguarding against hacker attacks, and anti-money laundering
standards.</p><p>Exchanges
in the latter category saw their combined market share drop from 80% at the
beginning of the year to 68%. Binance, the industry leader, experienced the
most significant loss during this period. The <a href="https://www.financemagnates.com/terms/e/exchange/">exchange</a> had a market share of
56% at the start of the year. Now, it has fallen below 40%.</p><p>Among 'low
tier' exchanges, Huobi has performed the best, increasing its market share 6%
since January. DigiFinex's market share has grown 3.5%, and KuCoin's has advanced 1.3% in
the same period. Market observers claim that current regulatory pressure could
benefit smaller players, as they aren't under constant scrutiny or observation
by regulators.</p><p>This
highlights investors' sensitivity to lawsuits filed against Binance by US
regulatory agencies. First, in March, <a href="https://www.financemagnates.com/cryptocurrency/cftc-sues-binance-for-illegal-derivatives-exchange-numerous-violations/" target="_blank" rel="follow">the CFTC accused the exchange</a> of
unlawfully servicing US clients. Then, in June, <a href="https://www.financemagnates.com/cryptocurrency/sec-charges-binance-ceo-over-illegal-exchanges-commingling-of-client-fund/" target="_blank" rel="follow">the SEC filed a lawsuit</a> against
Binance concerning the alleged mishandling of billions of dollars belonging to
clients.</p><p>"Binance,
Crypto.com, and BeQuant saw the largest decline in market share by trading
volume, falling 11.0%, 4.54%, and 2.77% to 40.4%, 0.46%, and 0.96%,
respectively," CCData commented.</p><p>Binance.US Suffers a Hit</p><p>A separate
report by Kaiko, quoted by Finance Magnates in early July, confirms
Binance's drop in market share from 60% at the beginning of the year to 52%. However,
Binance.US, an independent entity operating in the US market, received the most
brutal hit. Its market share shrank dramatically from 22% <a href="https://www.financemagnates.com/cryptocurrency/binances-market-share-drops-amid-regulatory-pressure/" target="_blank" rel="follow">to just 0.9%</a> between
April and June.</p><p>According
to other data published by CCData in June, the spot trading volume of
<a href="https://www.financemagnates.com/terms/c/cryptocurrencies/">cryptocurrencies</a> on centralized exchanges (CEXs) <a href="https://www.financemagnates.com/cryptocurrency/crypto-spot-volumes-on-centralized-exchanges-hit-lowest-since-march-2019/" target="_blank" rel="follow">plunged to $495 billion in
May</a>, which is a decrease of 21.8%. This was the lowest level since March 2019. According
to the latest data, in July, the volume on centralized exchanges dropped 10.5% to $515 billion, closely mirroring the poor results from May.</p><p>"Trading
activity across spot markets decreased in July after major assets, including
Bitcoin and Ethereum, largely traded in a narrow range during the month,"
CCData added.</p>

This article was written by Damian Chmiel at www.financemagnates.com.