Although today there are hundreds of crypto trading platforms, a few are as big and influential as Binance, FTX, and Coinbase that process the bulk of the crypto trading transactions today. These crypto exchanges command a market cap of billions of dollars and play a key role in enabling retail and small investors to get their first exposure to digital assets seamlessly.
That being said, the growing popularity of cryptocurrencies has also drawn the ire of financial regulators the world over that are concerned about the speculative nature of the crypto industry and its possible negative repercussions.
Most recently, leading crypto exchange Binance has found itself at crossroads with global financial watchdogs, forcing the exchange to shutter its crypto futures services in various countries around the world. This begs the question, could the diminishing popularity of Binance translate to FTX’s gain? In this article, we will discuss in detail how the regulatory crackdown on Binance could help FTX grow its business footprint in the crypto exchange space.
Regulatory Crackdown on Binance
The Binance crypto exchange was launched in the year 2017 along with its native digital token BNB as an ERC-20 token.
According to data on CoinGecko, Binance is headquartered in the Cayman Islands and allows users to engage in spot, options, and futures trading based on their risk for appetite.
Binance CEO Changpeng Zhao — commonly known as CZ – is arguably one of the most prominent crypto personalities who has played a crucial role in developing the influential brand that Binance is today. This, despite the recently growing regulatory crackdowns on the exchange.For instance, in June this year, UK’s financial watchdog, the Financial Conduct Authority (FCA) said that the Binance exchange
“is not permitted to undertake any regulatory activity in the UK.”
Unfortunately, for Binance, this was only the first of several other crackdowns that were coming the exchange’s way due to non-compliance with regulations and local laws across the world.
Soon after the UK crackdown, Malaysia took aim at Binance when its financial watchdog censured CZ for “illegal” business in the country. At the same time, Binance announced it was shuttering its European derivatives business and delisting all stock tokens amid the mounting regulatory pressure.
In the same vein, on July 30, India’s anti-money laundering agency, the Enforcement Directorate summoned Binance executives with regard to their potential role involving betting apps.
The aforementioned string of regulatory assault on Binance reflected in the sliding price of its native token BNB which tumbled from more than $680 at its ATH value on May 10 to as low as $266 in July 2021.
The direct impact of the regulatory beating witnessed by Binance reflected in traders flocking to other rival crypto exchanges, the most notable of them being FTX.
Binance’s Loss is FTX’s Gain
Binance’s weakening grip over the crypto exchange market is paving the way for the rise of FTX, a Bahamas-headquartered cryptocurrency derivatives exchange that also allows spot and futures trading.
FTX crypto exchange, with Sam Bankman-Fried (SBF) as its CEO has been in the headlines of late for all the good reasons such as its partnership with famous ‘Shark Tank’ celebrity Kevin O’Leary, NFL legend Tom Brady, getting the naming rights to Miami Heats’ home stadium, the FTX Arena, partnering with the top Formula 1 team Mercedes-AMG Petronas, and others.
Besides the high-profile marketing and sponsorship deals, FTX has also been witnessing an increasing number of traders flock to the exchange due to its excellent customer service, negligible withdrawal fees, staking features, and a lot more.
According to the chart shared below, we can infer that over time, FTX has outperformed pretty much all its rivals including Binance, Coinbase, Kraken, Huobi, and others in terms of relative volume growth since January 1, 2020.
Similarly, the chart below shows how FTX’s share of global crypto trading volume over a 15 day mean period has been on an upward trajectory since May 1 2019, and shows no signs of slowing down anytime soon.
Further, FTX’s native token, FTT provides a slew of benefits to its holders that encourages a HODL approach toward the token.
FTT token holders who choose to stake the token on FTX benefit from increased referral rebate rates, bonus votes on FTX polls, increased airdrop rewards, maker fee, waived blockchain fee, and IEO tickets for IEOs hosted on FTX.
The following chart gives a complete overview of what to expect by staking FTT on the exchange.
While the tides of time might not be overly favorable for Binance as of now, it would not be the wisest decision to count CZ out of the game already.
On September 16, CZ stated that Binance must become a centralized entity if it hopes to get into the good books of financial regulators across the globe.
In July, CZ also went on to say that he’s willing to step down as the exchange’s CEO as it looks to transform into a regulated financial entity across all its marketplaces the world over.
Whatever be the case, the future sure looks both exciting and competitive with CZ and SBF at the helm of their respective exchanges, eyeing the top spot in the crypto exchange space for years to come.