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Are US Regulators the Reason Behind Drop in Crypto Trading Volume?

2 mins
Updated by Bary Rahma
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In Brief

  • Cryptocurrency trading volume on exchanges hits a low not seen since October 2020.
  • Some blame the US regulatory action and this year's banking crisis.
  • Major players are moving offshore to crypto hubs like the UAE and Hong Kong.
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Crypto trading volume on exchanges hit a low not seen since October 2020, according to data from Kaiko. Experts point to the banking crisis and a hostile regulatory environment in the United States as key factors.

Data from Kaiko, tracking 18 centralized crypto exchanges, shows daily crypto trading volumes are at $5 billion, the lowest levels since 2020. Many view the recent crackdowns and regulatory uncertainty by the US Securities and Exchange Commission (SEC) as a driving force behind the decline.

Crypto Trading Volume Drops Significantly

Trading volume on crypto exchanges refers to the total number of digital assets bought and sold. It is the most common metric for assessing an exchange’s size and popularity.

In both cases, the general trend for this year is downward. Experts generally point to regulatory action in the US as one key explanation. However, there is no clear consensus.

Crypto Trading Volume
Aggregate Trading Volume. Source: Kaiko

Danny Oyekan, the founder and CEO of digital asset exchange Blockfinex, told BeInCrypto that this year’s banking crisis might be playing a role.

“Trading volumes are actually doing quite well in the Middle East and Asia—it’s in the US and Canada where they’re lagging. It seems as though exchanges in the US are struggling to access the banking services they need in the wake of heightened regulatory scrutiny and with virtually no progress toward clear regulation.” 

US Regulators to Blame?

Oyekan believes that the root of low interest in trading cryptocurrencies is uncertainty in the US, which is driving interest in other markets worldwide.

“Uncertainty about regulation, the economy, and about access to funding through banks. That uncertainty is driving a lot of major players offshore, particularly to international crypto hubs like the UAE and Hong Kong, which may explain why trading volumes are doing so well in Asia.”

Likewise, Ryan Li, co-founder of CyberConnect, agrees that a hostile regulatory environment in the US is part of the problem.

“This year, there are several factors at play, including low liquidity and market FUD caused by regulatory actions, especially in the United States. Trading volumes often reflect the current macroeconomic environment, and May always proves to be an interesting time for crypto,” Li told BeInCrypto.

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Josh Adams
Josh is a reporter at BeInCrypto. He first worked as a journalist over a decade ago, initially covering music before moving into politics and current affairs. Josh first owned Bitcoin in 2014 and has followed the space ever since. He is particularly interested in Web3 adoption, policy and regulation, CBDCs, privacy, and the future of the metaverse.
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