Tiger Research: Is CEX embracing stocks while altcoins are being abandoned?

Key Points Summary

• The fee model for cryptocurrency spot trading has peaked, with the rise of decentralized perpetual contract exchanges like Hyperliquid, coupled with a more relaxed regulatory environment following the Trump administration's arrival. Multiple factors have prompted leading global cryptocurrency exchanges to readjust their development direction.
• Nowadays, major exchanges are actively expanding into traditional financial categories such as stocks and financial derivatives, gradually aligning their operational models with traditional financial institutions.
• However, problems arise as centralized exchanges have always been the core liquidity providers in the entire crypto ecosystem. If exchanges gradually weaken their cryptocurrency main business, the existing operational order of the entire crypto market may be completely disrupted.
• Cryptocurrency projects have now entered a phase of self-survival, and whether they can operate independently without the support of exchanges will become a watershed moment for project development, leading to a clear differentiation in the industry landscape.

Trading Apple Stocks on Binance

Starting from June 1, users can directly trade U.S. stocks such as Apple (AAPL) and Alphabet (GOOGL) through the Binance App. The next day, Binance announced the addition of trading for components of the Korea Composite Stock Price Index, including the three most actively traded Korean stocks: SK Hynix, Samsung Electronics, and Hyundai Motor.

Binance's idea to expand into stock trading dates back to 2021. In April of that year, the platform launched tokenized stock trading, supporting trades for assets like Tesla (TSLA), Apple (AAPL), and Microsoft (MSFT). However, due to ongoing regulatory pressure, this service was completely shut down in July of the same year. At that time, the business faced three major structural challenges: the legal classification of stock tokens as either securities or derivatives remained unresolved; related products were not equipped with investor prospectuses as required by EU regulations; and Binance itself had not obtained the direct qualifications to conduct such business. The Federal Financial Supervisory Authority of Germany, the Financial Conduct Authority of the UK, and the Securities and Futures Commission of Hong Kong all raised objections based on these issues.

With the relaunch of stock trading services, significant adjustments have been made to the overall structure. Binance now executes orders through a licensed broker in the Abu Dhabi Global Market, clearly defining the business as securities brokerage services, thereby completely avoiding previous legal disputes. The core issue that halted the business in 2021—the ambiguity regarding the ownership of the underlying asset issuer—has now been largely resolved.

This industry movement shows a clear temporal overlap. At the same time, Bybit also launched a traditional financial perpetual contract market, not only listing contracts for Korean stocks like SK Hynix and Samsung Electronics but also opening trading for SpaceX (SPCX) perpetual contracts. Coinbase quickly followed suit, announcing support for SPCX contract trading.

Major leading cryptocurrency exchanges are collectively transforming at nearly the same stage, abandoning the single cryptocurrency trading model in favor of comprehensive traditional financial service platforms, and the reasons behind this shift are worth exploring.

Three Driving Forces for Transformation

Three external pressures are collectively pushing exchanges to bid farewell to a purely cryptocurrency operating model.

Continuous Decline in Cryptocurrency Trading Volume

The primary pressure comes from the overall shrinkage of cryptocurrency trading volume. The core revenue source for exchanges comes from trading fees on cryptocurrencies, and the level of trading volume is entirely determined by market sentiment.

Binance's average daily spot trading volume has significantly dropped from a peak of about $45 billion in October 2025 to only $7.7 billion now, a decline of nearly 80%. The total spot trading volume of all other centralized exchanges has also fallen from a peak of $63 billion to the current $18.8 billion, a decrease of about 70%. The continuous shrinkage of trading volume means that the business model relying on trading fees for profit is becoming increasingly unsustainable. Major exchanges have long realized that solely depending on cryptocurrency trading fees cannot build a sustainable revenue system.

Hyperliquid Diverts On-Chain Liquidity

A comparison of data clearly shows the current market landscape: the trading volume of altcoins outside of Bitcoin and Ethereum compared to the trading volume of real-world assets like stocks and commodities on the Hyperliquid platform reveals a stark difference.

Hyperliquid continues to attract on-chain liquidity by launching perpetual contracts for stocks and commodities. By mid-2026, among the top thirty perpetual contract trading volumes on the platform, 23 are stocks and commodities, while cryptocurrency assets have become the minority.

The on-chain market is no longer the exclusive domain of cryptocurrencies. The trading volume of a decentralized exchange is now sufficient to rival that of traditional centralized exchanges, which serves as a wake-up call for major CEXs.

Regulatory Environment Undergoing Change

The third pressure comes from the overall shift in regulatory direction following the Trump administration's arrival. The U.S. Securities and Exchange Commission has dropped lawsuits against Coinbase and Kraken. During the phase when regulatory agencies were strict, applying for traditional financial licenses came with extremely high compliance risks; however, now that regulatory boundaries are becoming clearer, various financial licenses not only serve as endorsements for compliant operations but also become competitive advantages for platforms.

Under a clear regulatory framework, exchanges can explore new development directions based on their existing advantages. The three pressures have emerged simultaneously, compounded by the rising market demand for stocks and various financial derivatives. If leading exchanges want to survive in the long term, they must accelerate their transformation and carve out new development paths.

Strategies of Major Centralized Exchanges

Faced with the same industry challenges, each centralized exchange has chosen a distinctly different development path.

Binance: Building a Comprehensive Financial Super Platform

Binance's development strategy is very clear: to create a one-stop comprehensive trading platform that retains all user trading activities within its ecosystem to avoid user attrition.

Binance has long been ahead in the on-chain space and has achieved impressive results. The platform first established centralized trading operations and then launched the Binance Smart Chain in April 2019, entering the on-chain ecosystem; in the first half of 2025, it launched the Binance Alpha product, successfully capturing a significant share of the on-chain market.

However, entering 2026, on-chain liquidity began to shift towards stocks. Hyperliquid took the lead, continuously capturing liquidity with stock and commodity-related products, directly impacting Binance's long-accumulated on-chain user base. In response, Binance chose not to compete directly with Hyperliquid in the on-chain space but instead took a different approach by launching stock trading services for its over 200 million existing users. Compared to engaging in fierce competition on the opponent's home turf, retaining existing users is clearly a more prudent choice.

The specific operational model of this business is as follows: the trading orders submitted by users on Binance's front end are first received by the licensed broker Nest Trading in the Abu Dhabi Global Market, which then forwards them to Alpaca Securities to complete the subsequent processes. Order execution, clearing, settlement, and asset custody are all handled by Alpaca. Binance does not directly hold the relevant securities assets, and this structural design allows it to avoid direct securities regulatory jurisdiction.

It is worth mentioning that Nest Trading has been confirmed as an affiliate of Binance, and Binance also holds a minority stake in Alpaca. Both parties have signed a revenue-sharing agreement, allowing Nest Trading to receive 50% of the order flow fees and 65% of the securities lending income.

Currently, Binance is building a complete set of supporting infrastructure to fully transform into a financial super app. Before liquidity for altcoins further flows to Hyperliquid and the stock market, the platform is fully focused on consolidating its existing user base.

Bybit: Dual-Line Parallel Development Model

Bybit was founded in 2018, starting in the derivatives trading field and achieving rapid expansion with leverage up to 100 times and low fees. The platform now adopts a dual-line strategy of centralized and on-chain operations: on one hand, migrating liquidity from the centralized exchange to the blockchain network, and on the other hand, directly launching traditional financial asset derivatives on the centralized platform.

The platform's layout began with on-chain operations. In June 2025, Bybit launched tokenized stock products from Backed in the spot segment, officially taking the first step in tokenized stock layout. In November of the same year, Bybit collaborated with Mantle public chain and Backed to officially launch the xStocks product on the Mantle blockchain, covering mainstream U.S. stocks like Nvidia (NVDA) and Apple (AAPL).

In May 2026, Bybit launched the atomic pricing feature on the decentralized exchange Fluxion within the Mantle ecosystem. This feature no longer relies on automated market makers to match orders but directly obtains quotes from asset issuers, allowing on-chain trading to meet the execution standards required by traditional financial institutions.

In the centralized business segment, Bybit is also very active. Influenced by similar industry pressures as Binance, the platform launched traditional financial perpetual contracts in April 2026, continuously adding new assets every week. Currently, mainstream U.S. stocks like Tesla (TSLA), Nvidia (NVDA), and Apple (AAPL), as well as commodities like gold, silver, and crude oil, support round-the-clock trading settled in USDT. On June 4, perpetual contracts for Samsung Electronics, SK Hynix, and Hyundai Motor were officially launched, and the platform also opened trading for pre-IPO shares of SpaceX.

The ultimate goal of these two business lines is to build a complete infrastructure that connects on-chain and off-chain scenarios, achieving refined trading of traditional financial assets. Unlike Binance, Bybit has not placed all its focus on the centralized platform but continues to deepen its on-chain ecosystem through Fluxion and the Mantle public chain.

Coinbase: The Most Credible Exchange in the U.S. Market

Coinbase went public on Nasdaq in 2021 and was included in the S&P 500 index in May 2025. Backed by Wall Street capital, it is currently the most recognized centralized cryptocurrency exchange among institutions globally.

Coinbase also maintains its on-chain business layout. In 2023, it launched the Ethereum Layer 2 network Base, which developed rapidly, with the total locked value in the Layer 2 network approaching half at one point in 2025. However, entering 2026, Base's growth stagnated and is no longer the company's core development direction.

At this stage, Coinbase's focus has fully shifted to institutional clients. In August 2025, the company completed the acquisition of Deribit for $2.9 billion, capturing about 85% of the global crypto options market. Subsequently, the platform obtained futures broker qualifications issued by the U.S. Commodity Futures Trading Commission, launching cross-margin trading functions that integrate spot, futures, and perpetual contract positions into the same margin account, further expanding its institutional client base. That year, the borrowing balance of hedge funds and asset management institutions on the platform reached a quarterly record high.

In December 2025, Coinbase launched zero-commission stock and exchange-traded fund trading services within its own app. While Binance adopted an indirect operating model through external brokers, Coinbase directly engaged in stock trading business thanks to its years of accumulated compliance qualifications. On June 4, the platform announced support for pre-IPO shares of SpaceX.

Hyperliquid continues to enrich its product offerings and accumulate liquidity in a regulatory gray area, while Coinbase's early layout of stock trading has given it more proactive response capabilities amid industry changes.

Kraken: Moving Towards a Federal Crypto Bank

Kraken was founded in 2011 and is one of the longest-established exchanges in the crypto industry. Its core strategy is to continuously acquire various financial licenses and build its own infrastructure, ultimately aiming to create a crypto asset custody bank regulated by the U.S. federal government.

Acquiring compliance qualifications is Kraken's top priority. In March 2025, the company spent $1.5 billion to acquire the trading platform NinjaTrader, successfully obtaining a futures broker license from the U.S. Commodity Futures Trading Commission while taking over the platform's 20,000 retail trader users. In April 2026, it acquired Bitnomial for $550 million. This platform, after ten years of operation, is the only native crypto platform that has obtained all three core licenses from the U.S. Commodity Futures Trading Commission—designated contract market license, derivatives clearing organization license, and futures broker license. In March 2026, Kraken successfully obtained a master account with the Federal Reserve; in May of the same year, it submitted an application for a national trust company license to the Office of the Comptroller of the Currency.

While fully promoting compliance arrangements, Kraken has not neglected the on-chain ecosystem. In December 2024, the platform launched its self-developed Layer 2 network Ink, subsequently building the lending protocol Tydro and the decentralized perpetual contract exchange Nado on that network. In January 2026, it launched the on-chain financial product DeFi Earn and in May introduced Bitcoin custody service Bitcoin Vault. The design logic of all on-chain products revolves around assets that can clearly articulate value to institutional clients, and altcoins are not included in its on-chain business planning.

While other exchanges are launching stock trading to retain users, Kraken has chosen a different path, aspiring to become a trusted native crypto bank for institutional clients.

Although the specific strategies of each centralized exchange differ, they share a common point: altcoins no longer hold significant positions in the future plans of all platforms.

Where Will the Crypto Industry Go

For a long time, centralized exchanges have been the liquidity pillar of the crypto ecosystem. Exchanges list tokens and drive trading enthusiasm; the vast majority of crypto projects rely on this support to survive.

The deeper issue in the industry is that almost no crypto project can prove its real value through actual business revenue. The support logic for token prices has never been based on the fundamentals of the projects themselves but rather on early traffic-driving methods such as exchange listings and liquidity mining. The premise for this operational model to continue is that exchanges and traders maintain enthusiasm for the crypto space.

Now, as retail trading volume continues to shrink, the tightening of exchange support and market promotion resources will follow, making the original ecological model difficult to sustain in the long run.

Market trends have already shifted, with funds beginning to flow towards projects that can create value through real product revenue rather than tokens that solely rely on exchange support. Hyperliquid's platform token HYPE is a typical example. Although this platform has diverted on-chain liquidity that originally belonged to cryptocurrencies towards stocks, HYPE remains one of the best-performing crypto assets currently. This phenomenon also indicates that the originally mutually beneficial relationship between centralized exchanges and crypto projects is gradually disintegrating.

The strategic choices of major exchanges also confirm this trend. Retail trading volume and user base are the foundation of an exchange's survival; if they continue to cling to a purely cryptocurrency trading path, their foundation will only be further eroded. The market has already lost its previous enthusiasm for newly listed crypto tokens. Exchanges have no choice but to actively explore new revenue sources while safeguarding their existing platform structures and user bases.

This is also the core reason why major platforms are collectively shifting towards stock derivatives, wealth management services, and asset custody businesses. In the process of comprehensive resource allocation, exchanges have effectively let altcoin projects fend for themselves in facing market challenges.

In the past, when the market entered a downward cycle, centralized exchanges would share the pressure with the entire crypto industry and endure the bear market together. However, now exchanges are beginning to explore paths for growth that do not rely on cryptocurrencies. This also indicates that this round of industry downturn will be more challenging for the crypto sector than any previous bear market.