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Binance Market Share Dips Below 50% Amid Regulatory Issues, OKX and Bybit Rise

Binance, the world’s largest cryptocurrency exchange based on trading volume, has seen its market share drop below 50% for the first time, according to a report by Token Insight, a crypto data and analytics provider.

The 2023 Crypto Exchange Status Report, published on Jan. 18, 2024, revealed that Binance’s market share fell from 54.2% at the beginning of 2023 to 48.7% at the end of the year, marking a significant decline in its dominance over the crypto market.

The report attributed the main reason for Binance’s loss of market share to the legal challenges it faced from the U.S. Securities and Exchange Commission (SEC), which sued the exchange for allegedly violating securities laws and offering unregistered securities to U.S. investors.

The lawsuit, which was filed in September 2023, resulted in the resignation of Binance’s CEO Changpeng Zhao, who agreed to pay a $200 million fine and cooperate with the SEC’s investigation. Following Zhao’s departure, Binance’s market share plummeted to a low of 32% in October 2023, before recovering slightly in the following months.

Source: Token Insight

While Binance struggled with regulatory hurdles, other exchanges capitalized on the opportunity to increase their market share and influence. According to Token Insight, OKX, a Malta-based crypto exchange, increased its market share by 4.3 percentage points, from 8.9% to 13.2%, becoming the second-largest exchange by trading volume.

Bybit, a Singapore-based crypto derivatives exchange, also boosted its market share by 2.2 percentage points, from 6.1% to 8.3%, ranking third in the market. Both OKX and Bybit benefited from their diverse product offerings, user-friendly interfaces, and competitive fees, according to the report.

The report also highlighted the role of decentralized exchanges (DEXs) in the crypto market, which allow users to trade crypto assets directly without intermediaries or custodians. The report stated that DEXs will maintain a stable position in the market in 2023, despite not showing dramatic growth.

According to the report, DEXs accounted for approximately 2.83% of the total trading volume throughout the year, with Uniswap, a leading DEX on Ethereum, dominating the sector with a 57.8% market share.

The report concluded that the crypto exchange market will continue to evolve and diversify in 2024, as new players enter the scene and existing ones innovate and adapt to the changing regulatory and competitive landscape.

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