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Trading volumes on centralized exchanges have fallen to their lowest level in more than four years amid mounting regulatory pressure from US regulators and lawmakers.
According to a June 7 report by analytics firm CCData, the combined volume of spot trading and derivatives trading fell 15.7% month-on-month in May, marking a second consecutive month of decline in cryptocurrency trading activity.
Because the data is only current as of the end of May, it does not take into account the potential impact of recent SEC lawsuits against Coinbase or Binance.
CCData shows that of all the large firms that have been hit by the decline in trading volumes, Binance has been hit the hardest.
In May, Binance lost even more of its market share, dropping to just 43% from a peak of 57% in February. This is the third month in a row that Binance’s overall market share has declined.
The report states that the bulk of this decline may be due to Binance canceling zero-fee trading for USDT pairs, but notes that the exchange is undoubtedly under regulatory pressure in the US.
The biggest beneficiaries of Binance’s market share drop were cryptocurrency exchanges Bullish, Bybit, and BitMEX, each of which gained market share by just over 1% between March and May.
On June 5, the SEC sued Binance and its CEO, Changpeng Zhao, for not registering as a securities exchange and offering unregistered securities. Within 24 hours, the net outflow of funds from Binance exceeded $778 million, although the company assured the public that their assets remain safe.
Over the next 48 hours, the average trading volume on the top three decentralized exchanges (DEXs) jumped 444%.
Related: Binance Coins. US trades at a premium amid litigation fears, fiat gateway issues
Despite a decline in overall trading volumes – mainly due to spot trading – the market share of derivatives trading on centralized exchanges increased, setting a new record in the process.
According to the report, the derivatives market on centralized exchanges currently accounts for 79.5% of the entire cryptocurrency market, up 1.2% from 78.3% in April. However, the total volume of derivative financial instruments decreased by 14.4% in May.