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Binance’s Bitcoin Trading Volume Plunges 57% as Regulatory Pressure Mounts
Coinbase may be a beneficiary, with volumes at that exchange higher by 9% this month.
Updated Sep 20, 2023, 4:59 p.m. Published Sep 19, 2023, 5:11 p.m.
trading volumes on Binance have tumbled this month as lawsuits and regulatory scrutiny mount on the world’s largest crypto exchange.
According to K33 Research, Binance’s 7-day average spot BTC volume is down 57% since the beginning of September versus roughly flat readings at a number of other exchanges. Volumes at U.S.-based competitor Coinbase are higher by 9% over this period.
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The dramatic decline comes as Binance is in the crosshairs of regulators around the world following a string of lawsuits, license rejections and voluntary withdrawals. Prosecutors at the U.S. Department of Justice (DOJ) are reportedly weighing charges against the company, while the Securities and Exchange Commission (SEC) three months ago sued Binance, the exchange’s U.S entity Binance.US and founder Changpeng “CZ” Zhao, alleging multiple federal securities laws.
“The ongoing DOJ and SEC cases vs. Binance may have dissuaded market makers from trading on Binance, explaining parts of the decline,” K33 Research senior analyst Vetle Lunde said. “Some market making has probably leaked to other exchanges, but it's still almost certain that Binance's woes negatively impact market volumes,” he added.
Binance curbed on Sep. 7 its zero-fee promotion for BTC trading with TrueUSD (TUSD) stablecoin, one of the most liquid trading pairs on the platform, which may have contributed to the decline.
Binance.US also suffered from an exodus in trading activity. Data from crypto analytics firm Kaiko shows that the weekly overall trading volume on that platform dropped to $40 million from what was nearly $5 billion earlier this year, a roughly 99% decrease.
UPDATE (Sep. 19, 18:07 UTC): Adds Binance's curb on zero-fee promotion for TUSD.
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When adjusted for asset market capitalization SOL's relative futures volume looks better, K33 Research noted.
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- Solana's SOL futures began trading on the Chicago Mercantile Exchange (CME) on Monday, with a notional daily volume of $12.3 million and $7.8 million in open interest, significantly lower than the debuts of bitcoin (BTC) and ether (ETH) futures.
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- Despite the bearish market conditions, the launch of CME SOL futures offers new ways for institutions to manage their exposure to the token, said Joshua Lim of FalconX.
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