One exchange to rule them all?… As FTX died, Binance thrived. The crypto exchange saw its share of global crypto spot trading grow by 7 percentage points after the November collapse of its onetime rival. As of last month, Binance reportedly controlled 55% of all crypto spot trading (think: buying and selling of crypto at market price). And at the end of last year, it oversaw a whopping 92% of all bitcoin spot trades. It's not just spot: last month Binance's share of on-exchange derivatives trading hit 61%. Now US-based exchanges are fighting over the scraps:
2nd (coin)place: Just 6.5% of crypto spot trading takes place on Coinbase, the second-largest exchange by trading volume.
Showing kraks: Crypto.com's and Kraken's spot trading market share has actually declined since FTX's collapse.
The bigger they are… Binance may be the world's largest crypto exchange by volume, but that doesn't mean it’s all smooth sailing. This week, the exchange said it would suspend deposits and withdrawals of US dollars through bank accounts. And while Binance published a "proof of reserves" in December, the exchange said that an actual audit (aka: reserves + liabilities) wouldn’t happen for some time. Just last month it said it mistakenly mixed customers' crypto with token collateral.
Crypto risks putting many eggs in one basket… At its core, crypto's about decentralization (picture: DAOs, DeFi). But as Binance's share of the market continues to grow, the industry is growing more concentrated along with it. That centralization creates crypto market risk, because if one big player falls (like: FTX), it could take large chunks of the industry down with it.