The recent regulatory actions taken by the Securities and Exchange Commission (SEC) on centralized exchanges (CEXs) such as Binance and Coinbase have led investors to turn towards decentralized exchanges (DEXs), resulting in a massive surge of 444% in trading volumes over the past 48 hours for the top three DeFi exchanges.
Massive Surge in DeFi Trading Volumes
The total trading volumes on popular DEXs such as PancakeSwap v3 (BSC), Uniswap v3 (Ethereum), and Uniswap v3 (Arbitrum) increased by over $792 million between June 5 and June 7, as per data from CoinGecko. These three DEXs constitute around 53% of the total DEX trading volume over the last 24 hours.
During the previous month’s meme coin frenzy, DeFi exchanges slightly surpassed Coinbase’s trading volumes; this was because meme coins such as Pepe (PEPE) and Turbo (TURBO) were listed only on decentralized platforms such as Uniswap. Further, Curve, the DEX for trading stablecoins, witnessed a 328% rise in its trading volume as investors poured in capital towards it.
Most of the trading activity on Curve concentrated on Tether (USDT) and USD Coin (USDC), the leading US dollar-pegged stablecoins.
The increase in DEX trading volumes has led to a net outflow of funds from centralized cryptocurrency exchanges like Binance. Binance recorded a net outflow of $778 million, which is relatively low compared to its total reserve of over $8 billion in its stablecoin balance.
SEC Sues Binance and Coinbase
In recent times, the SEC has turned up the heat on crypto firms like Coinbase and Binance by filing lawsuits against them, adding more tension to the crypto space. On June 5, the regulatory body sued Binance, Binance.US, and Binance CEO Changpeng Zhao, accusing them of violating securities laws. The lawsuit alleges that Binance traded on some crypto assets that are securities, and the exchange’s operation in the US is illegal since it is not registered as a securities exchange in the country.
The SEC also charged Coinbase, the largest crypto exchange in the US, with multiple offences including trading unregistered securities and operating as a securities broker without registration.
The huge surge in DeFi trading volumes can be attributed to investors turning their attention towards DEXs in light of the recent regulatory actions against CEXs. It is yet to be seen how the regulatory landscape will play out for centralized and decentralized exchanges in the future.
Featured image from Pixabay and chart from TradingView.com
