Coinbase, like most major crypto companies at the moment, is having to navigate an uncertain regulatory landscape. Less than 2 weeks ago, the largest crypto exchange in the US, was threatened with a ‘Wells Notice’ by the Securities and Exchange Commision, meaning that it is likely to soon take action against Coinbase’s alleged offering of unregistered securities. Binance too, the largest crypto exchange in the world, has now been sued by the Commodities and Futures Trading Commission for circumventing regulation. And while regulatory pressures mount on centralized exchanges, decentralized ones are beginning to look more appealing.

The decentralized effect

For the first time since January 2022, the monthly trading volume of the most popular decentralized exchange in the world, Uniswap, exceeded $71.bn. According to research by The Block, this volume was 45% greater than that of Coinbase over the same month. This is despite the fact that the monthly trading volume of Coinbase has increased over the past month – with March representing a 23% increase in trading volume from February. In fact, trading volume for decentralized exchanges has been steadily increasing since the beginning of the year – more so than it has for centralized ones.

What’s spiking interest in decentralized exchanges?

The reasons for Uniswap’s increased volume are multifaceted. Firstly, the fiat value of the crypto space as a whole has been generally increasing since the beginning of the year – in part due to concerns surrounding the global banking sector and their effect on the performance of stablecoins such as USDC. The other factor at play is the increased regulatory scrutiny on the centralized exchange sector. The comparatively lesser regulatory purview of decentralized exchanges is increasing their appeal. However, with centralized exchanges remaining a crucial fiat onramp for the sector, their adoption is likely to remain strong throughout the year ahead.