By Hannah Lang
(Reuters) – Can the best scholarship win?
Crypto platforms are vying for dominance in the United States, the world’s largest market, following a regulatory crackdown that has rocked the industry.
Coinbase and Binance.US, two of the largest crypto exchanges by market share among those operating in America, have lost ground this year. The former is down to about 51% on June 18 from a high of 62% in January, while the latter is down to about 1.5% from 22% in March, according to data from Kaiko.
Both Binance and Coinbase have been sued by the US Securities and Exchange Commission (SEC) for alleged securities law violations, but deny wrongdoing. Their regulatory woes and others have conspired with Sam Bankman-Fried’s FTX collapse last year to stir up crypto chaos.
Rivals smell blood.
Kraken, Bitstamp and LMAX Digital – an institutional crypto exchange – have seen their market share increase by a whopping 5.66% since the beginning of the year, according to the Kaiko data, which represents the global market share of exchanges operating in the United States . States.
Kraken is up around 29%, leaving Binance.US behind.
“Dominance in the US market is very important,” said Ravi Doshi, co-head of trading at Genesis Trading. “Most of the trading volume takes place during trading hours in the US because most of the amount of capital is here and most of the interest comes from US institutions”
Guy Hirsch, global managing director at Kraken, said the company has spent “a lot of time and resources improving the quality of its platform”.
Bobby Zagotta, CEO of Bitstamp USA, said the recent growth was driven by a “flight to quality” in the market. Bitstamp’s global market share among exchanges operating in the US has risen to approximately 9%.
Coinbase and LMAX declined to comment on the data, while Binance.US – the US affiliate of the world’s largest crypto exchange – did not respond to a request for comment.
‘SHOW AND TONS’ TOKENS
The market share swings come at a precarious time for the digital asset industry, with the SEC claiming that most cryptos are unregistered securities.
According to market players, it may not be easy for hungry challengers to gain market share.
In years past, crypto exchanges have been able to gobble up business quickly by providing access to a slew of coins.
“Difference based on the breadth of your offerings has made many of these exchanges popular,” said Wade Guenther, a partner at investment firm Wilshire Phoenix.
For example, both Kraken and Coinbase list over 200 tokens, including some that the SEC has labeled as unregistered securities in its lawsuits, such as solana and polygon.
But now the increased regulatory oversight of those offerings has made it more challenging for exchanges to follow the old playbook.
“As an exchange operator, you increase your risk because you are offering these tokens that can be considered securities,” said Doshi at Genesis Trading.
Still, the cost-benefit analysis for exchanges could change if crypto token prices recovered and there was a sudden increase in investor interest, Doshi said.
“I see this happening all over again where tons and tons more tokens are added as we enter a new bull market.”
(Reporting by Hannah Lang in Washington; editing by Michelle Price and Pravin Char)
