In a shift within the crypto exchange landscape, Bybit has emerged as the world’s second-largest cryptocurrency exchange, overtaking Coinbase. This change comes amid a backdrop of regulatory challenges faced by Binance, the leading exchange by trading volume. The Chinese national Ben Zhou is the key figure behind Bybit‘s rapid growth, having founded the cryptocurrency exchange in 2018.
Bybit’s Meteoric Rise
A substantial increase in trading activity marked Bybit‘s ascendancy to the second position. According to a June 25 report by Kaiko, Bybit‘s (website) market share surged from 8% in October to 16% by March, surpassing Coinbase. The report highlighted:
“Since October, the exchange’s market share has surged from 8% to 16%, surpassing Coinbase in March to become the second-largest exchange after Binance.”
In contrast, Coinbase‘s market share saw a marginal increase of just 1%, despite reporting improved profits and revenue during the same period.
Impact of Binance’s Regulatory Challenges
The growth in Bybit‘s market share is partially attributed to Binance‘s regulatory issues. Binance, the dominant player in the industry, saw its market share decline from 60% to 54% over the past eight months. This 6% decrease is believed to be linked to the exchange’s regulatory troubles. As per Kaiko:
“This could indicate that the exchange benefited from Binance’s regulatory troubles.”
FinTelegram has placed Bybit on the Red Compliance List due to its regulatory violations.
Read our Bybit compliance review here.
A significant blow came on November 21, 2023, when U.S. officials announced a $4.3 billion settlement with Binance for Anti-Money Laundering violations, marking one of the largest criminal fines in U.S. history. Additionally, in June 2023, the SEC sued both Coinbase and Binance for alleged securities violations, accusing Binance and its founder, Changpeng Zhao, of misappropriating billions of user funds. Despite these allegations, no evidence of misappropriation was found, and Binance remains the largest crypto exchange by trading volume.
Strategic Moves by Bybit
Bybit‘s strategic initiatives have also played a crucial role in its growth. In February 2023, Bybit introduced zero-fee trading for Circle‘s USD (USDC) stablecoin, which likely contributed to the increased trading volume. Furthermore, Bybit’s average fees are competitive, matching those of Binance and OKX, known for some of the lowest fees in the industry.
The exchange’s co-founder and CEO, Ben Zhou, emphasized Bybit’s dedication to maintaining competitive fees and providing a secure platform. He stated:
“Our commitment to providing competitive fees, a safe and secure platform, and innovative products like Unified Trading Account has resonated with our users.”
Conclusion
Bybit’s rise to the second-largest cryptocurrency exchange underscores the dynamic nature of the crypto market and the impact of regulatory environments on market share. As Bybit continues to innovate and offer competitive trading conditions, it will be interesting to observe how the competitive landscape evolves, especially with regulatory scrutiny intensifying across major exchanges.
