CEX embraces stocks—have altcoins been abandoned?

Original Authors: Henry Kim, Ryan Yoon

Translation: Chopper, Foresight News

TL;DR:

• The growth model for cryptocurrency spot trading fees has plateaued. The rise of decentralized perpetual exchanges like Hyperliquid, combined with a looser regulatory environment under the Trump administration, has prompted the world's top crypto exchanges to realign their development strategies.
• Exchanges are now expanding into traditional finance sectors like stocks and financial derivatives, gradually aligning their operational models with traditional financial institutions.
• However, a problem arises: centralized exchanges have always been the core liquidity providers for the entire crypto ecosystem. If exchanges gradually de-emphasize their primary crypto business, the existing operational order of the entire crypto market could be fundamentally disrupted.
• Crypto projects have thus entered a phase of self-sufficiency. Whether they can operate independently without the support of exchanges will become a watershed moment for project development, leading to a clear divergence in the industry landscape.

Trade Apple Stock on Binance

Starting June 1st, users can directly trade US stocks like Apple (AAPL) and Alphabet (GOOGL) via the Binance app. The following day, Binance announced the addition of trading for blue-chip stocks in the Korea Composite Stock Price Index (KOSPI), including the three most actively traded Korean stocks: SK Hynix, Samsung Electronics, and Hyundai Motor.

Binance's foray into stock trading dates back to 2021. In April of that year, the platform launched a tokenized stock trading feature, supporting stocks like Tesla (TSLA), Apple (AAPL), and Microsoft (MSFT). However, due to increasing regulatory pressure, the service was completely shut down in July of the same year. The business faced three major structural challenges that made it unsustainable: the legal classification of stock tokens as securities or derivatives remained uncertain; the products lacked an investor prospectus as required by EU regulations; and Binance itself did not have the direct qualifications to operate such a business. Regulators like the German Federal Financial Supervisory Authority (BaFin), the UK Financial Conduct Authority (FCA), and the Hong Kong Securities and Futures Commission (SFC) all raised objections based on these issues.

With the relaunch of the stock trading service, the overall structure has been significantly revised. Binance now executes orders through a licensed broker in the Abu Dhabi Global Market (ADGM), with the business clearly defined as a securities brokerage service, completely circumventing the previous legal disputes. The core conflict that led to the service suspension in 2021—the ambiguous legal status of the underlying asset issuer—has also been largely resolved.

This industry-wide move shows a clear temporal convergence. Concurrently, Bybit also launched perpetual contracts for traditional finance categories, including contracts for Korean stocks like SK Hynix and Samsung Electronics, as well as perpetuals for SpaceX (SPCX). Coinbase followed suit, announcing support for SPCX contracts.

The collective shift by major crypto exchanges to abandon the single-asset crypto trading model and pivot towards comprehensive traditional financial service platforms warrants a deeper look into the underlying reasons.

Three Drivers of the Transformation

Three external pressures are collectively pushing exchanges away from a pure cryptocurrency operating model.

Declining Crypto Trading Volume

The primary pressure stems from a contraction in overall cryptocurrency trading volume. An exchange's core revenue comes from crypto trading fees, and volume levels are entirely dictated by market sentiment.

Binance's average daily spot trading volume has plummeted from a peak of approximately $45 billion in October 2025 to just $7.7 billion today, a decline of nearly 80%. The combined spot volume of all other centralized exchanges has also fallen from a peak of $63 billion to $18.8 billion currently, a drop of about 70%. This continuous decline in volume means the business model reliant on trading fees is becoming unsustainable. Exchanges have long recognized that relying solely on crypto trading fees cannot build a sustainable revenue system.

Hyperliquid Diverts On-Chain Liquidity

A comparison of data clearly reveals the current market landscape: comparing the trading volume of altcoins (excluding Bitcoin and Ethereum) on centralized exchanges with the volume of real-world assets like stocks and commodities on Hyperliquid shows a clear gap.

Hyperliquid has been continuously absorbing on-chain liquidity by listing perpetual contracts for stocks and commodities. As of mid-2026, among the top 30 perpetual contract trading pairs on the platform by volume, 23 are stocks and commodities, making cryptocurrency assets the minority.

The on-chain market is no longer the exclusive domain of crypto. The trading volume of a single decentralized exchange can now rival that of traditional centralized exchanges, sending a clear warning signal to major CEXs.

Changing Regulatory Environment

The third pressure comes from the shift in the overall regulatory climate following the Trump administration's assumption of office. The US Securities and Exchange Commission (SEC) has dropped its lawsuits against Coinbase and Kraken. During periods of strict regulatory enforcement, applying for traditional financial licenses carried high compliance risks. Now, as regulatory boundaries become clearer, various financial licenses not only provide a stamp of compliance but also serve as a competitive advantage for platform differentiation.

Within a clear rule framework, exchanges can leverage their existing strengths to explore new development directions. The convergence of these three pressures, coupled with rising demand for stocks and other financial derivatives, means that leading exchanges must accelerate their transformation to survive and forge new development paths.

Strategies of Major Centralized Exchanges

Faced with the same industry challenges, different centralized exchanges have adopted divergent development paths.

Binance: Building a Comprehensive Financial Super-Platform

Binance's development strategy is clear: build a one-stop comprehensive trading platform, keeping all user trading activity within its own ecosystem to prevent user churn.

Binance has been laying the groundwork for its on-chain track for some time, achieving notable success. The platform first built its centralized exchange business, then launched the Binance Smart Chain in April 2019 to enter the on-chain ecosystem. In the first half of 2025, it introduced the Binance Alpha product, securing a significant share of the on-chain market.

However, entering 2026, on-chain liquidity began tilting towards stock categories. Hyperliquid took the lead, continuously capturing liquidity with its stock and commodity-related products, directly impacting Binance's long-cultivated on-chain user base. Instead of competing head-on with Hyperliquid in the on-chain domain, Binance has carved its own path by launching stock trading services for its user base of over 200 million. Compared to fighting on an opponent's home turf, retaining existing users is clearly the safer bet.

The specific operational model is as follows: When a user places a trade order on the Binance front end, it is first received by Nest Trading, a broker licensed in the Abu Dhabi Global Market (ADGM). Nest Trading then forwards the order to Alpaca Securities for execution, clearing, settlement, and asset custody. Binance does not directly hold the relevant securities assets, a structural design that allows it to circumvent direct securities regulation.

Notably, Nest Trading has been confirmed as a Binance-affiliated entity, and Binance also holds a minority stake in Alpaca. Both parties have signed a revenue-sharing agreement, under which Nest Trading receives 50% of order flow fees and 65% of securities lending income.

Binance is currently building its full suite of supporting infrastructure, transforming into a comprehensive financial super-app. Before altcoin liquidity further flows to Hyperliquid and the stock market, the platform is focusing on solidifying its existing user base.

Bybit: A Dual-Track Development Model

Founded in 2018, Bybit started in the derivatives trading space, growing rapidly by offering up to 100x leverage and low fees. The platform now employs a dual-track strategy involving both centralized and on-chain operations: migrating centralized exchange liquidity to the blockchain network while directly listing traditional financial asset derivatives on its centralized platform.

The platform's expansion began with its on-chain business. In June 2025, Bybit listed tokenized stock products offered by Backed company on its spot market, taking the first formal step into tokenized stocks. In November of the same year, Bybit, the Mantle blockchain, and Backed collaborated to officially launch the xStocks product on the Mantle blockchain, covering major US stocks such as Nvidia (NVDA) and Apple (AAPL).

In May 2026, Bybit launched an atomic quote function on Fluxion, a decentralized exchange within the Mantle ecosystem. This feature bypasses the automated market maker to source quotes directly from asset issuers, allowing on-chain trading to meet the execution standards required by traditional financial institutions.

On the centralized business front, Bybit has also been active. Subject to similar industry pressures as Binance, the platform launched perpetual contracts for traditional finance categories in April 2026 and has been listing new assets weekly since. Currently, major US stocks like Tesla (TSLA), Nvidia (NVDA), and Apple (AAPL), along with commodities such as gold, silver, and crude oil, are available for 24/7 trading settled in USDT. On June 4th, perpetual contracts for Samsung Electronics, SK Hynix, and Hyundai Motor were officially listed, alongside the launch of trading for pre-IPO shares of SpaceX.

The ultimate goal of both business tracks is to build robust infrastructure, bridge on-chain and off-chain scenarios, and enable sophisticated trading of traditional financial assets. Unlike Binance, which focuses heavily on its centralized platform, Bybit is leveraging Fluxion and the Mantle blockchain to continuously cultivate its on-chain ecosystem.

Coinbase: The Exchange with the Strongest Credibility in the US Market

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

Coinbase also maintains its on-chain business layout. It launched the Ethereum Layer 2 network, Base, in 2023. Base has grown rapidly, at one point in 2025 accounting for nearly half of the total value locked (TVL) across all Layer 2 networks. However, entering 2026, Base's growth has stagnated and is no longer a core development focus for the company.

Currently, Coinbase's primary growth focus has shifted entirely to institutional clients. In August 2025, the company acquired Deribit for $2.9 billion, securing roughly 85% of the global crypto options market. Subsequently, the platform obtained a Futures Commission Merchant (FCM) license from the US Commodity Futures Trading Commission (CFTC) and launched cross-margining functionality, integrating spot, futures, and perpetual contract positions into a single margin account to further attract institutional clients. That year, lending balances from hedge funds and asset management firms on the platform hit a new quarterly high.

In December 2025, Coinbase launched zero-commission trading for stocks and Exchange Traded Funds (ETFs) within its own app. While Binance uses an indirect operational model via external brokers, Coinbase conducts its stock trading business directly, leveraging its accumulated compliance qualifications. On June 4th, the platform announced support for trading pre-IPO shares of SpaceX.

As Hyperliquid continues to expand its product offerings and accumulate liquidity in a regulatory gray area, Coinbase's preemptive move into stock trading gives it more initiative to navigate the industry's evolving landscape.

Kraken: Marching Towards Becoming a Federally Chartered Crypto Bank

Founded in 2011, Kraken is one of the longest-standing exchanges in the crypto industry. Its core strategy is to continuously acquire various financial licenses and build proprietary infrastructure, with the ultimate goal of becoming a federally regulated crypto asset custodian bank.

Obtaining compliance qualifications is Kraken's top priority. In March 2025, the company acquired the trading platform NinjaTrader for $1.5 billion, securing a CFTC FCM license and taking over its base of 20,000 retail traders. In April 2026, it acquired Bitnomial for $550 million. Bitnomial, after a decade of operation, is the only native crypto platform to have held all three core CFTC licenses: Designated Contract Market (DCM), Derivatives Clearing Organization (DCO), and Futures Commission Merchant (FCM). In March 2026, Kraken successfully obtained a Federal Reserve master account; in May of the same year, it applied for a national trust bank charter with the Office of the Comptroller of the Currency (OCC).

While aggressively pursuing compliance, Kraken has not neglected its on-chain ecosystem. The platform launched its proprietary Layer 2 network, Ink, in December 2024, subsequently building the lending protocol Tydro and the decentralized perpetual exchange Nado on top of it. In January 2026, it launched the on-chain wealth management product DeFi Earn, and in May, it introduced the Bitcoin custody service Bitcoin Vault. The design logic for all on-chain products revolves around assets whose value can be clearly articulated to institutional clients; altcoins are also not part of its on-chain business plan.

While other exchanges are listing stocks to retain users, Kraken has chosen a different path, aiming to become the trusted native crypto bank for institutional clients.

Although the specific strategies of each centralized exchange vary, they share a commonality: altcoins no longer hold a significant place in any of their future plans.

Where is the Crypto Industry Headed?

For a long time, centralized exchanges have been the liquidity backbone of the crypto ecosystem. Exchanges list tokens, driving trading volume and interest, and the vast majority of crypto projects have relied on this support to survive.

The underlying issue in the industry is that almost no crypto project can prove its true value through actual business revenue. The support for token prices has never been based on the project's fundamentals, but rather on initial hype tactics like exchange listings and liquidity mining. This operational model can only persist as long as exchanges and traders remain enthusiastic about the crypto space.

With retail trading volumes shrinking and enthusiasm waning, support mechanisms from exchanges, such as listings and marketing resources, will also tighten. The original ecosystem model is destined to be unsustainable.

The market tide has already turned. Capital is starting to flow towards projects that can generate value through revenue from real-world products, rather than tokens solely dependent on exchange support. Hyperliquid's native token, HYPE, is a prime example. Even though this very platform is diverting on-chain liquidity away from cryptocurrencies and towards stocks, HYPE remains one of the best-performing crypto assets currently. This phenomenon signifies that the once symbiotic relationship between centralized exchanges and crypto projects is gradually eroding.

The strategic choices of the major exchanges confirm this trend. Retail trading volume and user base are the lifeblood of exchanges. If they stubbornly cling to pure crypto trading, this foundation will only continue to erode. The market has lost its former enthusiasm for newly listed crypto tokens. Exchanges have no choice but to explore new revenue streams while protecting their existing platform architecture and user base.

This is the core reason why major platforms are collectively pivoting towards stock derivatives, wealth management value-added services, and asset custody. In the comprehensive reallocation of resources, exchanges are effectively letting altcoin projects fend for themselves in the market.

In the past, during market downturns, centralized exchanges shared the burden and weathered the bear market alongside the entire crypto industry. But now, exchanges are exploring pathways to achieve growth independently of cryptocurrency. This suggests that the current industry downturn will be far more challenging for the crypto sector than any previous bear market.