Binance, the world’s largest cryptocurrency exchange, has seen its Bitcoin trading volume decline by 48% this month, following the reintroduction of fees for its most liquid BTC trading pairs. According to a Sept. 29 post by Kaiko research analyst Dessislava Ianeva, this is the second-largest monthly decline in Binance’s BTC trading volume since April, when the exchange canceled the trading incentives attached to its Binance USD (BUSD) stablecoin due to regulatory challenges.
In both cases, the decline in trading volume coincided with the removal of zero-trading fee incentives for the largest BTC trading pairs. However, the removal of free trading incentives is not the only factor contributing to Binance’s declining volume. The exchange has also faced increased regulatory scrutiny across various jurisdictions, including the U.S. and Europe, which has negatively impacted its overall market share.
In the United States, financial regulators, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have brought legal action against Binance due to its failure to comply with local laws. Additionally, there are reports that the exchange and its CEO, Changpeng Zhao, are under investigation by the U.S. Department of Justice (DOJ). On the other side of the Atlantic, the platform has had to voluntarily withdraw its license applications from some countries, such as Germany, while it has been outrightly denied in some places.
Amid these regulatory troubles, Binance has also had to deal with the recent exits of several top executives, including Binance U.S. CEO Brian Shroder, General Counsel Han Ng, Chief Strategy Officer Patrick Hillmann, and SVP for Compliance Steven Christie, among others.
Despite these challenges, Binance co-founder He Yi has tried to downplay the situation, saying the exchange faced even more challenging situations in 2019 but emerged out of them stronger. She said the firm “will win this time as well.”