Leading centralized exchanges will extend market share in 2022

The top centralized cryptocurrency exchanges have reached market share highs this year as crypto trading volume consolidates on the platforms of only a few trusted companies.

So-called “top-tier” crypto exchanges have increased their market share from 89% in August 2021 to 96% in February 2022 according to data collected by the British analytical firm CryptoCompare published on Monday 11 April.

The company analyzed more than 150 active centralized exchanges, ranked them on security, number of available assets, regulatory compliance, KYC checks, and more, and rated them from a top score of AA to a low of F with “top tier” receipt of a Class B or above.

A total of 78 exchanges received a “top tier” grade, with Coinbase, Gemini, Bitstamp, and Binance the only four to receive the highest AA rating.

The report found that top-tier exchanges traded a total of $ 1.5 trillion in February 2022, compared to $ 62 billion in the “lower-tier” exchanges. This is a metric that CryptoCompare claims that “both retail and professional traders are moving to lower risk exchanges.”

Consolidation of exchanges has occurred through both exchanges and acquisitions of other, larger exchanges. Top crypto exchanges looking at foreign expansion are sometimes already licensed, smaller exchanges operating in the country of interest, as was the case with FTX’s acquisition of the Japanese Liquid Group exchange on February 2, 2022.

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The company reports that since June 2019, 54 exchanges have been closed due to non-competition in the market, which has caused further consolidation of users to top-ranking exchanges. In addition, China’s crackdown on Crypto 6 saw Chinese-based exchanges close with analysts adding:

“As we have seen, volumes have begun to concentrate among the top tier exchanges, and this is a trend that will continue in the future. As the industry grows, we expect there to be an oligopoly. of exchanges that dominate trading volumes, as their traction accelerates and leaves smaller players behind.

The report revealed some of the challenges facing the cryptocurrency exchange industry, highlighting the political pressure placed on exchanges to maintain Russian sanctions as an area that could see more action.

“Although many exchanges have withstood this pressure,” the analysts wrote, “this political factor is a major risk to consider for the future of exchanges.”

The movement of crypto users who prefer asset self-management was also an issue highlighted in the report. “The mantra of ‘not your keys, not your coins’ is growing stronger amid the political pressure received by exchanges,” the report states, before adding is a “movement that could change the business model of exchanges hinder. “

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