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Regulatory Pressures Lead to 57% Drop in Binance's Bitcoin Trading Volume

Sep 20, 2023 at 11:57 am

The trading volumes of Bitcoin (BTC) on Binance have taken a substantial hit this month, primarily due to the growing legal complexities and heightened regulatory scrutiny faced by the world's largest cryptocurrency exchange. As reported by K33 Research, the average 7-day spot BTC volume on Binance has seen a sharp decline of 57% since the onset of September. Conversely, various other exchanges have maintained a relatively steady trading volume over the same period, with the U.S.-based rival, Coinbase, even registering a 9% uptick.

This notable reduction in trading activity on Binance aligns with the exchange's increasing prominence in the sights of regulatory bodies worldwide. The exchange has encountered a string of legal proceedings, license denials, and voluntary withdrawals. The U.S. Department of Justice (DOJ) is reportedly contemplating potential charges against the company. Furthermore, three months ago, the Securities and Exchange Commission (SEC) initiated a lawsuit against Binance, along with its U.S. counterpart Binance.US and founder Changpeng "CZ" Zhao, citing multiple infractions of federal securities laws.
Data by K33 ResearchData by K33 Research 

Vetle Lunde, a senior analyst at K33 Research, proposed:

"The ongoing DOJ and SEC cases against Binance may have deterred market makers from engaging in trades on the platform, which helps explain parts of the decline. While some market-making activity may have shifted to other exchanges, it remains highly likely that Binance's troubles are having a negative impact on market volumes."

In addition, on September 7th, Binance terminated its zero-fee promotion for BTC trading with the TrueUSD (TUSD) stablecoin, which had been one of the most liquid trading pairs on the platform. This decision likely contributed to the observed decrease in activity.

Binance.US has also experienced a notable drop in trading activity. Data from the crypto analytics firm Kaiko indicates that the overall weekly trading volume on the platform plummeted from nearly $5 billion earlier this year to a mere $40 million, signifying an approximate 99% decrease.

Read more: Assessing PayPal's Stablecoin Aspirations: Insights from Tether's Co-Founder

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