Tiger Research: CEXs Embrace Stocks, Are Altcoins Being Abandoned?

Summary

• The growth model for cryptocurrency spot trading fees has peaked, coupled with the rise of decentralized perpetual exchanges like Hyperliquid and the easing of the regulatory environment following the Trump administration. These combined factors are prompting major global crypto exchanges to adjust their development direction.
• Now, major exchanges are increasingly laying out traditional financial categories such as stocks and financial derivatives, and their operational models are gradually aligning 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 weaken their core cryptocurrency business, the original operational order of the entire crypto market could be completely disrupted.
• Crypto projects are entering a phase of independent survival. Whether they can operate independently without exchange support will become a watershed for project development, leading to significant differentiation in the industry landscape.

Trade Apple Stock on Binance

Starting June 1st, users can directly trade US stocks like Apple (AAPL) and Alphabet (GOOGL) through the Binance app. The next day, Binance announced the addition of trading for stocks in the KOSPI index, including the three most actively traded Korean stocks: SK Hynix, Samsung Electronics, and Hyundai Motor.

Binance's plans for a stock trading business can be traced back to 2021. In April of that year, the platform launched tokenized stock trading, supporting stocks like Tesla (TSLA), Apple (AAPL), and Microsoft (MSFT). However, due to increasing regulatory pressure, the service was fully shut down in July of the same year. The business faced three main structural challenges that made it unsustainable: the legal classification of stock tokens as securities or derivatives remained undetermined; the products lacked investor prospectuses as required by EU regulations; and Binance itself did not have the direct qualifications to operate such a business. Regulators (BaFin, FCA, SFC) raised objections based on these issues.

With the relaunch of the stock trading service, the overall structure has undergone significant adjustments. Binance now executes orders through a licensed broker in the Abu Dhabi Global Market (ADGM), and the business is clearly defined as a securities brokerage service, completely avoiding the previous legal controversies. The core conflict that led to the 2021 shutdown – the ambiguity regarding the issuer of the underlying assets – has now been largely resolved.

These industry actions show a clear temporal overlap. During the same period, Bybit also launched a perpetual swap market for traditional financial categories, listing not only contracts for Korean stocks like SK Hynix and Samsung Electronics but also perpetual contracts for SpaceX (SPCX). Coinbase quickly followed suit, announcing support for SPCX contract trading.

The collective transformation of major crypto exchanges, moving away from pure cryptocurrency trading towards comprehensive traditional financial service platforms, warrants a closer look at the underlying reasons.

Three Driving Forces for Transformation

Three external pressures are jointly pushing exchanges away from a pure cryptocurrency operational model.

Declining Cryptocurrency Trading Volume

The primary pressure comes from the shrinking overall trading volume of cryptocurrencies. Exchanges' core revenue comes from transaction fees on crypto trades, and trading volume is entirely dictated by market sentiment.

Binance's average daily spot trading volume has fallen sharply from a peak of around $45 billion in October 2025 to just $7.7 billion currently, a decline of nearly 80%. The combined spot trading volume of all other centralized exchanges has also dropped from a peak of $63 billion to $18.8 billion today, a decline of about 70%. Shrinking trading volumes mean the business model relying on transaction fees is becoming unsustainable. Major exchanges have long realized that relying solely on crypto transaction fees cannot build a sustainable revenue system.

Hyperliquid Diverts On-Chain Liquidity

Comparing data clearly reveals the current market landscape: the gap is visible when contrasting the trading volume of altcoins (excluding Bitcoin and Ethereum) with the trading volume of real-world assets like stocks and commodities on the Hyperliquid platform.

Hyperliquid continuously absorbs on-chain liquidity by listing perpetual contracts for stocks and commodities. As of mid-2026, among the top 30 perpetual contract trading pairs on its platform, 23 are stocks and commodities, with cryptocurrency assets becoming the minority.

The on-chain market is no longer exclusive to cryptocurrencies. The trading volume of a single decentralized exchange is now comparable to traditional centralized exchanges, serving as a wake-up call for major CEXs.

Shift in the Regulatory Environment

The third pressure stems from the overall shift in regulatory direction following the Trump administration. The SEC has dropped its lawsuits against Coinbase and Kraken. During periods of strict regulatory oversight, applying for traditional financial licenses carried extremely high compliance risks. Now, with clearer regulatory boundaries, various financial licenses not only serve as endorsements for compliant operations but also become competitive advantages for platforms.

Within a clear regulatory framework, exchanges can leverage their existing strengths to explore new development directions. With these three pressures converging simultaneously, coupled with rising market demand for stocks and various financial derivatives, top exchanges must accelerate their transformation to survive long-term, forging a new development path.

Strategies of Major Centralized Exchanges

Faced with the same industry predicament, each centralized exchange has chosen distinctly different development paths.

Binance: Building a Comprehensive Financial Super Platform

Binance's development strategy is clear: create a one-stop comprehensive trading platform that retains all user trading activity within its own ecosystem, preventing user churn.

Binance had already ventured into the on-chain arena early on and achieved notable success. The platform first built its centralized exchange business, then launched Binance Smart Chain in April 2019 to enter the on-chain ecosystem. In the first half of 2025, it introduced the Binance Alpha product, successfully capturing a significant share of the on-chain market.

However, entering 2026, on-chain liquidity began shifting towards stock categories. Hyperliquid took the lead, continuously capturing liquidity with stock and commodity-related products, directly impacting Binance's user base built over many years. In response, Binance chose not to compete directly with Hyperliquid in the on-chain space but instead took a different approach by offering stock trading services to its over 200 million existing users. Retaining existing users is a safer bet than directly competing on the competitor's turf.

The specific operational model is as follows: Trade orders submitted by users on Binance's frontend are first received by Nest Trading, a licensed broker in the Abu Dhabi Global Market (ADGM), which then forwards them to Alpaca Securities for execution. Alpaca handles order execution, clearing, settlement, and asset custody. Binance does not directly hold the relevant securities assets. This structural design allows it to avoid direct securities regulation.

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

Currently, Binance is building its own complete supporting infrastructure internally, fully transforming into a financial super app. Before altcoin liquidity flows further towards Hyperliquid and stock markets, the platform is fully committed to consolidating its existing user base.

Bybit: Dual-Track Parallel Development Model

Founded in 2018, Bybit started in the derivatives trading space, achieving rapid growth through high leverage (up to 100x) and low fees. Currently, the platform employs a dual-track strategy: migrating centralized exchange liquidity to the blockchain network on one hand, and listing traditional financial asset derivatives directly on its centralized platform on the other.

The platform's expansion began with its on-chain business. In June 2025, Bybit listed tokenized stock products introduced by Backed on its spot exchange, officially taking its first step into tokenized stocks. In November of the same year, Bybit partnered with the Mantle public chain and Backed to launch xStocks products on the Mantle blockchain, covering major US stocks like Nvidia (NVDA) and Apple (AAPL).

In May 2026, Bybit launched a request-for-quote (RFQ) feature on Fluxion, a decentralized exchange within the Mantle ecosystem. Instead of matching orders via an automated market maker (AMM), this feature directly requests quotes from asset issuers, enabling on-chain trades to meet execution standards required by traditional financial institutions.

Bybit has also been very active on its centralized business front. Facing similar industry pressures as Binance, the platform launched perpetual contracts for traditional financial categories in April 2026, adding new assets weekly. Currently, it supports 24/7 trading settled in USDT for stocks (TSLA, NVDA, AAPL), and commodities (Gold, Silver, Crude Oil). On June 4th, perpetual contracts for Samsung Electronics, SK Hynix, and Hyundai Motor were officially listed, along with pre-IPO trading for SpaceX.

The ultimate goal of both business tracks is to build comprehensive infrastructure, bridging on-chain and off-chain scenarios to enable refined trading of traditional financial assets. Unlike Binance, Bybit does not place all its focus on the centralized platform. Instead, it continues to deeply cultivate the on-chain ecosystem through Fluxion and the Mantle public chain.

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 widely recognized centralized crypto exchange by institutions globally.

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

Currently, Coinbase's strategic focus is fully shifting towards institutional clients. In August 2025, the company completed the acquisition of Deribit for $2.9 billion, capturing approximately 85% of the global crypto options market. Subsequently, the platform obtained a Futures Commission Merchant (FCM) license from the CFTC and launched cross-margining, allowing users to consolidate spot, futures, and perpetual contract positions into a single margin account, further expanding its institutional client base. That year, loan balances from hedge funds and asset management firms on the platform hit a new quarterly high.

In December 2025, Coinbase launched commission-free trading for stocks and ETFs within its own app. While Binance uses an indirect operational model with an external broker, Coinbase leverages its years of accumulated compliance qualifications to conduct stock trading directly. On June 4th, the platform announced support for pre-IPO trading of SpaceX.

While Hyperliquid continuously enriches its products and accumulates liquidity in regulatory gray areas, Coinbase's advance positioning in the stock business gives it more leverage to navigate the industry's changing landscape.

Kraken: Moving 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 accumulate various financial licenses, build its own infrastructure, and ultimately create a federally regulated crypto asset custody 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 the platform's 20,000 retail traders. In April 2026, it acquired Bitnomial for $550 million. After a decade of operations, Bitnomial was the only native crypto platform to hold 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 submitted an application for a National Trust Bank charter to the Office of the Comptroller of the Currency (OCC).

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

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

Although the specific strategies of each centralized exchange differ, they share one common trait: altcoins no longer hold a significant position in any of their future plans.

Where is the Crypto Industry Heading?

For a long time, centralized exchanges have been the liquidity backbone of the crypto ecosystem. Exchanges list tokens and drive trading activity; the vast majority of crypto projects have survived solely on this support.

The deep-seated industry problem is that very few crypto projects can demonstrate their true value through actual business revenue. The logic supporting token prices has never been the project's fundamentals, but rather early-stage promotional tactics like exchange listings and liquidity mining. This model can only be sustained as long as exchanges and traders maintain enthusiasm for the crypto sector.

Now, with retail trading volumes shrinking and enthusiasm waning, the support from exchanges in terms of listings and marketing resources will also tighten. The original ecosystem model is inherently unsustainable in the long run.

The market trend has shifted. Capital is flowing towards projects that can create value through revenue from real products, rather than tokens that solely rely on exchange liquidity injections. Hyperliquid's platform token, HYPE, is the most typical example. Even though this very platform diverted on-chain liquidity away from cryptocurrencies towards stock categories, HYPE remains one of the best-performing crypto assets currently. This phenomenon signifies that the symbiotic 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 lifeblood of an exchange. If they stubbornly stick to the pure cryptocurrency trading track, their foundation will only erode further. The market has long lost its former enthusiasm for newly listed crypto tokens. Exchanges have no choice but to actively cultivate 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 businesses. In