Exchange continues to gain market share as it faces challenges and regulatory scrutiny
Binance, the world’s largest cryptocurrency exchange, continues to gain market share while attracting more attention from regulators and critics. According to representatives of the exchange, the complexity of interacting with regulators is complicated by a number of subtleties inherent in the crypto-sphere.
Binance has set a goal of hiring an independent auditor to conduct a full balance sheet review, but large companies aren’t taking the risk of working with cryptocurrency platforms just yet.
Why is an audit so important?
Confirmation of cryptocurrency assets, performed by an auditor with a worldwide reputation, is very important, explains Roman Nekrasov, co-founder of ENCRY Foundation. First of all, it is important for working with managers of large funds and institutional investors, i.e. those who invest their clients’ assets. In addition, the availability of confirmed reserves is a trump card when communicating with global regulators, who are watching the crypto industry more and more closely year after year. For Binance, the presence of reserves is all the more relevant because the company issues its own BUSD stabelcoin, the expert adds.
Binance has established itself at the center of the digital asset sector, which has come under increased pressure and demands for transparency following the high-profile collapse of the FTX exchange. Representatives of the exchange not for the first time referred to the complexity of the audit in the field of cryptocurrencies, but at the same time, the annual reports of the second largest cryptocurrency exchange Coinbase regularly makes Deloitte, that is, the fact that the representative of the “big four” deals with the cryptobusiness, is quite.
Binance’s growing share of the cryptocurrency market coincides with its overall rise after a difficult 2022, which will be remembered for several phases of significant collapses and prices, a series of high-profile bankruptcies of leading players, and mass layoffs.
The crypto market recently surpassed $1 trillion for the first time since the FTX crash in November, and the top two cryptocurrencies, bitcoin and Ethereum, rose 40% and 30% respectively in January. Cryptoassets have seen $230 million in inflows this year, according to investment group CoinShares.
Binance’s other competitors are struggling to keep up. After the collapse of FTX, U.S.-based Coinbase increased its spot market share by less than one percentage point to 6.5 percent. According to CryptoCompare, other exchanges, including Kraken or Crypto.com, saw their shares shrink over the same period. At its peak last summer, FTX controlled about 5.6% of the spot market.
Binance has also increased its presence in cryptocurrency derivatives, where FTX had a 4% market share before its collapse. Since November, Binance’s share of cryptocurrency derivatives trading has risen from 58% to 61%, while its nearest competitor OKX’s share has remained unchanged at 13-14%.