Report reveals that top centralized crypto exchanges increase market share in 2022

As per a report, the top centralized crypto exchanges have touched new all-time highs for market shares in 2022 as the crypto trading volumes consolidate onto the only few trusted companies’ platforms.

According to data provided on Monday by UK analytics firm CryptoCompare, these so-called “top-tier” crypto exchanges boosted their market share from 89 percent in August 2021 to 96 percent in February 2022.

The firm graded over 150 active centralized exchanges on security, the number of assets offered, regulatory compliance, Know Your Customer checks, and other factors, assigning them a letter grade ranging from AA to F, with “top tier” exchanges getting a B or higher.

A total of 78 exchanges were given a “top tier” rating, with Coinbase, Gemini, Binance, and Bitstamp being the only four to get an AA.

According to the research, top-tier exchanges exchanged $1.5 trillion in February 2022, while “lower-tier” exchanges traded $62 billion. This indicator, according to CryptoCompare, reveals that “both retail and professional traders are moving to lower risk exchanges.”

Top crypto exchanges buying the small ones

Exchange consolidation has occurred as a result of both exchange closures and purchases from larger exchange platforms. Top crypto exchanges looking to expand internationally occasionally buy smaller exchanges that are already licensed and operating in the target area, as FTX did with the Japanese Liquid Group exchange on February 2, 2022. Coinbase also hinted at purchasing Commodity Futures Trading Commission (CFTC) regulated derivatives platform FairX in January.

Since June 2019, 54 exchanges have shuttered owing to being uncompetitive in the market, causing additional user convergence to top-ranking exchanges, according to the firm.

Moreover, China’s crackdown on crypto saw six Chinese-based exchanges close, with the analysts explaining that the “volumes have started to become concentrated amongst the top tier exchanges, and this is a trend which is bound to continue into the future.”

The report also noted some challenges for the crypto exchanges industry, highlighting the political pressure from countries like Japan on exchanges to enforce sanctions on Russia.