Cryptocurrency exchange Binance has experienced a notable recovery in its trading volume market share, rebounding to 49% two months after settling its case with the United States Department of Justice and paying a $4.3 billion settlement fine.
The data, provided by crypto research firm Kaiko, indicates a positive trend for Binance following multi-year lows in its market share as the exchange navigated legal challenges.
Two months post-settlement, Binance’s market share is recovering.
Volumes rose to 49%, up from multi-year lows. pic.twitter.com/Xuo4JQxpY9
— Kaiko (@KaikoData) January 29, 2024
Despite a strong start in 2023, Binance encountered setbacks in its spot market share throughout the year. From holding a 55.2% share in January 2023, the exchange saw a decline to as low as 34.3% in September of the same year, as reported by crypto data provider CCData.
Binance’s Market Share Bounces Back Post-Settlement
In June 2023, analytics firm Nansen reported a net outflow of $2.36 billion from Binance, while data aggregator DefiLlama reported a larger figure of $3.35 billion. Binance’s former CEO, Changpeng Zhao, disputed the accuracy of these figures, suggesting that third-party analytics firms may not accurately measure changes in assets under management.
Despite the challenges to its market share, Binance reported gaining 40 million more users in 2023, representing a nearly 30% increase compared to the previous year. The exchange emphasized its growth in key services and reiterated its commitment to placing users at the center of its decision-making.
Binance reached a $4.3 billion settlement with U.S. officials on November 21, covering civil regulatory enforcement actions by government departments, including the Treasury and Commodity Futures Trading Commission (CFTC). The recent recovery in market share suggests a positive trajectory for Binance in the wake of resolving its legal issues.
Following the settlement between the Department of the Treasury and the Commodity Futures Trading Commission in November 2023, Binance experienced a decline in market share among non-USD exchanges. The market share slipped from over 70% at the beginning of 2023 to a low of 44% around the time of the settlement.
Data from Kaiko, which compares Binance’s trading volume to 23 other centralized exchanges, indicates that the exchange’s market share remained relatively flat immediately after the settlement. However, it subsequently regained the 50% level, showcasing resilience post-settlement. Kaiko attributes this recovery to a combination of zero-fee promotions on the platform and the hype surrounding spot bitcoin ETFs in December and January.
In contrast, data from The Block, comparing Binance against 21 other exchanges, reflects a lower market share of around 46%, still significantly down from a peak of 71% in December 2022. Despite the legal and regulatory challenges Binance faces, the recent recovery in market share suggests a positive trajectory for the exchange after settling its legal issues.
Binance Reports Positive Growth in Crypto Services Despite Regulatory Challenges
In December 2023, Binance reported growth in services related to crypto payments, P2P trading, and earnings. Users using Binance Pay or Card grew by 54%, and the P2P platform processed 18% more trades than the previous year. The platform also added that its Binance Earn program supported over 362 assets across its Simple Earn suite and served 35% more users than last year.
The cryptocurrency exchange has reached over 170 million registered users, offering 431 assets across 1785 trading pairs by the end of 2023. The proof-of-reserves system was extended to 31 tokens, a notable increase from nine the previous year. Binance also introduced its Web3 Wallet.
According to recent data from various sources, the cryptocurrency exchange, which faced a tumultuous 2023 with legal and regulatory challenges, is displaying signs of market share recovery. Binance had a disastrous 2023 on the legal and regulatory front, including the settlement with the Department of Justice, the Department of the Treasury, and the Commodity Futures Trading Commission, concluding a criminal investigation into allegations of money laundering and sanctions violations—marking one of the largest corporate settlements in U.S. history.