Coinbase’s Market Share is on the Rise in Spite of SEC Actions
Despite facing legal action from the U.S. Securities and Exchange Commission (SEC), leading cryptocurrency exchange Coinbase has seen its market share soar to its highest point since January 2023, according to data from Kaiko. This indicates that Coinbase continues to maintain a strong hold on the cryptocurrency trading activities in U.S.-regulated exchanges.
Coinbase’s Market Dominance
Since the start of the year, Coinbase has consistently controlled approximately 50% of trading activities on U.S.-regulated exchanges. However, in June, amidst the SEC’s charges against Coinbase and Binance for violating federal securities laws, Coinbase’s market dominance experienced a significant boost, reaching a peak of 64%.
In contrast, other U.S. platforms like Kraken and Bitstamp also saw an increase in their market share during this period, as investors looked for alternative platforms amidst the regulatory scrutiny.
Traditional Financial Institutions Still Trust Coinbase
Surprisingly, despite the SEC’s lawsuit, several traditional financial institutions have chosen to continue their partnerships with Coinbase. Notable names include BlackRock, Fidelity, and ARK Investments, which have all signed a surveillance-sharing agreement with Coinbase for their spot-Bitcoin exchange-traded fund (ETF) filing.
BlackRock, the world’s largest asset manager, has even selected Coinbase Custody as the custodian for its trust’s Bitcoin holdings. These partnerships not only demonstrate trust in Coinbase as a U.S. financial institution but also indicate a growing acceptance of cryptocurrency enterprises within the traditional financial sector.
Ryan Selkis, the founder of crypto research firm Messari, emphasized the significance of these partnerships, suggesting that they underscore Coinbase’s legitimacy. Selkis believes that they highlight the increasing acceptance of cryptocurrency within the traditional financial space, despite the regulatory challenges faced by the industry.
Additionally, pro-XRP lawyer John Deaton revealed that over 2,000 Coinbase users have joined together to potentially be heard in the SEC’s lawsuit against the crypto firm. These individuals are filing an amicus curiae, or “friend of the court” brief, to provide the court with additional perspectives and opinions that could influence the final legal decision. This further demonstrates the support and belief in Coinbase’s legitimacy among its users.
Binance US Struggles Amidst the SEC Lawsuit
Unlike Coinbase, Binance US has suffered severe consequences following the SEC’s legal action. The exchange’s market share has plummeted, dropping to less than 1% from a peak of 20% recorded in April.
Binance US, amidst its transition to becoming a crypto-only platform, has faced significant liquidity issues. The exchange’s banking partners have halted their USD payment channels, resulting in operational challenges and negatively impacting its market position.
The liquidity issues faced by Binance US became evident on June 21 when Bitcoin experienced a flash pump, surging to $138,000 on the platform due to its low market depth. Prior to this incident, Bitcoin traded at a 3% discount on Binance US compared to other rival exchanges, emphasizing the challenges the exchange is currently facing.
Despite the SEC’s lawsuit, Coinbase has managed to strengthen its market share and maintain its position as a dominant player in the U.S. cryptocurrency trading landscape. The continued partnerships with traditional financial institutions and the support from its users reflect the growing acceptance and legitimacy of Coinbase within the industry.
On the other hand, Binance US has faced significant setbacks due to liquidity issues and the discontinuation of its USD payment channels. These challenges have led to a sharp decline in its market share, highlighting the potential consequences of regulatory scrutiny on cryptocurrency exchanges.
As the legal battle between Coinbase and the SEC unfolds, it will be interesting to see how the market dynamics and the perception of cryptocurrency exchanges by both traditional institutions and investors continue to evolve.