According to the “Global Crypto Industry Overview and Trends,” of 2022-2023 cryptocurrency, centralized exchanges have become popular in the following places. Twenty-two percent of the activity on centralized exchanges comes from the U.S., South Korea, and Russia.
The report from Huobi Research is one that published annually. It is supported by information from the top 100 CEXs regarding active users, trading depth, trading volume, and stability.
The United States is the leader and holds a share of 9% of the general traffic on centralized exchanges. South Korea, Russia, Turkey, and Japan hold 7.4%, 6.1%, 5.6%, and 3.8%, respectively. Young people in South Korea and Japan are resorting to cryptocurrency investments due to high unemployment and housing costs. At the same time, Russians are being affected by Western sanctions and Turks by hyperinflation.
Users believe that “centralized exchanges are vital in the cryptocurrency market. These exchanges are usually user-friendly, and many crypto novices start with them.” They also note that the popular centralized exchanges host the majority of customers and liquidity in the cryptocurrency market.
However, the results were released following the collapse of FTX, one of the biggest CEXs, which went bankrupt on November 11 due to financial concerns. Researchers have referred to this collapse as “the incident of the year since entering the current bear market.” In addition, it is part of the series of the Terra collapse and bankruptcy of 3AC.
Compared to previous years, the study shows that the total market size of CEX has experienced a significant decline in 2022. The study reveals a drop of 24% in unique users. In their words, “The continuous gloomy market condition and the depreciating assets are both depressing existing users.” On the same note, new user growth has dropped from 25 million from its high of 194 million in 2021.
Regulations on Centralized Exchanges
As a result of the FTX collapse, Huobi Research mentions the tightening of regulations on popular centralized exchanges.
President Biden of the United States signed an Executive Order on Ensuring Responsible Development of Digital Assets this year. The EU also approved its Markets in Crypto Assets (MiCA) legislation. In addition, Russia has been aiming to strengthen its legal structure for cryptocurrencies, and South Korea recently implemented eight pieces of legislation in this realm.
The authors point out that decentralized finance (defi) has stood out as one of the crypto marketplaces with explosive growth. Along with the several incidents that have occurred, defi users have put on a positive attitude towards the future and the long-term value it can bring to the industry.
In defi, the U.S. holds 32% of the traffic, followed by Brasil with approximately 5%. France, Canada, the U.K., and Germany come after.