Top centralized exchanges to expand market share in 2022

This year, the market share of the top centralized cryptocurrency exchanges has reached an all-time high as cryptocurrency trading volume has been concentrated on the platforms of a few trusted companies.

The market share of “top” cryptocurrency exchanges increased from 89% in August 2021 to 96% in February 2022, according to data published by British analytics firm CryptoCompare on Monday, April 11.

The firm analyzed more than 150 active centralized exchanges, ranking them based on security, number of assets available, regulatory compliance, KYC checks, and more, ranking them from a top score of AA to a low score of F, "Top ” The exchange received a grade of B or above.

A total of 78 exchanges received a “Top” rating, with Coinbase, Gemini, Bitstamp, and Binance being the only four with the highest AA rating.

The report shows that in February 2022, the top-tier exchanges traded a combined $1.5 trillion, while “lower-tier” exchanges traded $62 billion. CryptoCompare claims this is an indicator that “both retail and professional traders are moving to less risky exchanges.”

Consolidation of exchanges has been achieved through the closing of exchanges and the acquisition of other, larger exchanges. Top crypto exchanges eyeing overseas expansion sometimes acquire smaller exchanges that are already licensed and operate in countries of interest, such as FTX’s acquisition of Japan’s Liquid Group exchange on February 2, 2022.

The firm reported that 54 exchanges have shut down since June 2019 due to a lack of market competitiveness, leading to further consolidation of users into top exchanges. Additionally, China’s crackdown on cryptocurrencies resulted in the closure of six Chinese exchanges, the analyst added:

“As we have seen, trading volumes have started to concentrate on the top exchanges and this trend is bound to continue into the future. As the industry matures, we expect an oligopoly of trading volumes as their attractiveness accelerates , while smaller players get left behind."

The report sets out some of the challenges facing the cryptocurrency trading industry, highlighting the political pressure exchanges are facing to enforce Russian sanctions, an area that could see more action.

“While many exchanges have resisted such pressure, such political factors are an important risk for exchanges to consider going forward,” the analysts wrote.

Crypto users tend to self-custody their assets, which is also an issue mentioned in the report. "Amid political pressure on exchanges, the mantra of 'not your keys, not your tokens' has intensified," the report said, before adding that it was "likely to hamper exchange business models." exercise".