The major centralized cryptocurrency exchanges have hit new highs in market share this year as crypto trading volume consolidates on the platforms of just a few trusted companies.
So-called “premium” crypto exchanges have increased their market share from 89% in August 2021 to 96% in February 2022, according to data released by British analytics firm CryptoCompare on Monday, April 11.
The company analyzed over 150 active centralized exchanges and ranked them by security, number of assets available, regulatory compliance, KYC checks and more, ranking them from a maximum score of AA to a low F, with “best in class” being the grade B received or higher.
A total of 78 exchanges received the “Top Tier” grade, with Coinbase, Gemini, Bitstamp, and Binance being the only four to receive the highest AA rating.
The report revealed that the top-tier exchanges traded a combined $1.5 trillion in February 2022, compared to $62 billion for the “lower-tier” exchanges. This is a metric that CryptoCompare claims is causing “both retail and professional traders to move to lower-risk exchanges.”
Stock exchanges were consolidated both by closing stock exchanges and by taking over other, larger stock exchanges. Top crypto exchanges looking to expand overseas sometimes acquire already-licensed, smaller exchanges operating in the country of interest, as was the case with FTX’s acquisition of Japan’s Liquid Group exchange on February 2, 2022.
Related: Coinbase to increase transparency on potential listings for 2022
The company reported that since June 2019, 54 exchanges have been shut down for not being competitive in the market, which has led to further user consolidation on top-tier exchanges. Additionally, China’s crackdown on crypto led to the closure of 6 China-based exchanges, and the analysts added:
“As we have seen, volume is becoming increasingly concentrated in the top tier exchanges and this is a trend that will continue into the future. As the industry matures, we expect there will be an oligopoly of exchanges dominating trading volume as their traction accelerates, leaving smaller players behind.”
The report uncovered some challenges ahead for the cryptocurrency industry and highlighted the political pressure being exerted on exchanges to enforce Russian sanctions as an area where further action could be taken.
“While many exchanges have resisted these pressures,” the analysts wrote, “this political factor is an important risk to the future of exchanges.”
The movement of crypto users who prefer asset self-custody was also an issue highlighted in the report. “The ‘not your keys, not your coins’ mantra is growing stronger amid the political pressures exchanges are facing,” the report said, before adding that it is a “movement that’s transforming the business model.” of the stock exchanges”.
https://cointelegraph.com/news/leading-centralized-exchanges-extend-market-share-in-2022 Leading centralized exchanges are expanding their market share in 2022