After the bankruptcy of multiple crypto firms in 2022, lawmakers have underlined the need to protect investors across the board. As a result, regulators around the world have been cautiously tweaking regulations to fit-in crypto and other related digital assets. According to Eugen Kuzin, CMO of CoinsPaid, the move toward regulation is evolving. He pointed out that at this pace, one can expect to see most economies rolling out frameworks for the crypto ecosystem in three to five years. He told Watcher Guru,
“With proper regulation, crypto is bound to boost its image and add legitimacy to the offerings emanating from the industry. With the safety that comes with the right regulation, we may see more users and companies adopting crypto.”
The flip side
However, enforcement actions have dented the prospects of crypto exchanges a host of times. Take the case of Binance itself. The SEC thrusted a lawsuit upon it at the beginning of this month for alleged securities law violations. As reported recently, the exchange’s U.S. arm’s market depth shrunk by around 78% in just a week. In fact, alongside the dip in market depth, Binance has also started losing command in the U.S. market. Currently, Binance’s dominance is down to a 2.5-year low of 2.7%.
Well, it seems like Coinbase is also sailing in the same boat. Right after Binance, Brian Armstrong’s company was targeted by the SEC. Since the beginning of June, Coinbase’s liquidity is down ~16%.
Alongside losers, there have always been winners on the other side of the spectrum. When FTX collapsed, for instance, Binance and Coinbase enjoyed the fruit. Amid the current turmoil, others like Bitget seem to be benefitting. A spokesperson for the company recently revealed that its users in Latin America increased by 43% in the June 6 to 9 period. Parallelly, the exchange noted a 134% increase in deposits.
Is Robinhood Eating Up Coinbase’s Market Share?
At the moment, Robinhood might be another beneficiary. According to an analyst, Coinbase’s chunk of retail crypto traders might be turning towards Robinhood. As per Mizuho Securities analyst Dan Dole, data from April pointed out that Armstrong’s firm is losing market share in retail crypto transaction volume to Robinhood. According to Dole’s analysis,
“Coinbase is either losing competitive share to Robinhood or its take rates—what they get to keep from each transaction—declined. There is no perfect explanation for potential share losses aside from worries about regulatory pressures given SEC actions against crypto, or the increase in small-ticket item retail trading fees at Coinbase.”