The world’s largest crypto exchange, Binance’s market share of bitcoin (BTC) trading volume rose to 92% by the end of 2022, according to Arcane Research.
The exchange’s market share was just 45% at the start of last year, but the elimination of trading fees in June, not to mention the collapse of rival FTX in November, served to push users to Binance.
“No matter how you look at it in terms of trading activity, Binance is the crypto market,” Arcane wrote. “After lifting trading fees for its BTC spot pairs this summer, Binance completely overtook all market share in the spot market.”
While Binance has been by far the biggest crypto exchange by trading volume for several years, these and other numbers suggest monopoly-like dominance. A report from CryptoCompare showed Binance’s overall year-end crypto market share was 66.7%. Coinbase (COIN) came in second with a relatively tiny 8.2%.
“Retail crypto could enter a dark age that takes forever to exit” should Binance fail, said Edward Moya, senior analyst at Oanda. “Binance is too big … It is not healthy to have so much of the trading volume concentrated with any one exchange.”
Chatter about the solvency of Binance increased significantly after the collapse of FTX, and the exchange did suffer some outflows for a short period, though things have stabilized since. A market share this high could become problematic for the industry if Binance were to encounter any issues, whether regulatory or mistrust from users.
Binance is currently under investigation by the U.S. Justice Department over compliance with anti-money laundering laws and sanctions. The exchange also recently lost its auditor, Mazars Group, which announced a pause in its work with crypto exchanges looking to produce proof-of-reserves.
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