Cryptocurrency exchanges raking in billions of dollars
new york — Digital-asset exchanges are emerging as one of the biggest winners of the cryptocurrency boom.
The top 10 are generating as much $3 million in fees a day, or heading for more than $1 billion per year, according to estimates compiled by Bloomberg using trading volume reported on data tracker CoinMarketCap.com and fee information on the exchanges’ websites. Fees in the lowest range of the exchanges’ scale were used for the calculations.
The projections are a rough estimate as it’s near impossible to know what exactly the closely held firms are charging, including discounts for their most active traders. Based on daily trading volume and fees listed, annual revenue for the top 10 goes into the billions of dollars. While the numbers aren’t exact, the order of magnitude shows the boom in virtual currencies is generating some very real cash.
“The exchanges and transaction processors are the biggest winners in the space because they’re allowing people to transact and participate in this burgeoning sector,” said Gil Luria, an equity analyst at D.A. Davidson & Co, who reviewed the methodology for the revenue estimates. “There’s a big business there and it would not surprise me if they’re making hundreds of millions of dollars in revenue and possibly even billions a year.”
Tokyo-based Binance and Hong Kong-based OKEx are handling the largest volume of trading, equal to about $1.7 billion daily. Based on fees of 0.2 per cent, which are higher than OKEx’s 0.07 per cent for the most active traders, Binance is likely bringing in the most cash per day.
Huobi, Bitfinex, Upbit and Bithumb, which are all based in Asia, come next in the ranking. They process between $600 million and $1.4 billion of trading volume
There’s a big business there and it would not surprise me if they’re making hundreds of millions of dollars in revenue and possibly even billions a year
analyst at D.A. Davidson & Co
and charge fees of 0.3 per cent on average. More than half of the crypto currency trading happens in Asia-based exchanges, according to data compiled by smart contract platform Aelf.
Asia’s influence in crypto trading can be explained by a concentration of cryptocurrency mining in the region from Bitcoin’s early days, as miners took advantage of cheaper electricity costs, said Aelf co-founder Zhuling Chen. Other reasons include the region’s young population, which adopts new technology quickly, consumers that are comfortable with mobile payments, and even a strong gaming culture, which incentivises virtual transactions, said Chen.
Tightening regulation in the region, with China and South Korea restricting trading and initial coin offerings, also means that Asian firms have been forced to become global, he said.