Welcome back to the Protocol Power Index, a ranking of the most powerful companies by tech industry subsector, as well as the companies best positioned to challenge them. This time: crypto exchanges.
Few industries have gone from not existing to being worth hundreds of billions of dollars in less than 15 years. Crypto trading is one of them.
From its humble origins as a difficult and esoteric process dominated by nerds and programmers, crypto trading can now be done in minutes by anyone with a credit card and a Coinbase account. The path there hasn’t been easy: from multimillion-dollar thefts to bankruptcies and liquidations to regulatory shutdowns, exchanges have met nearly every demise you can think of, with more sure to come.
Today, Coinbase, FTX and Binance dominate the market across the world, with hundreds of smaller players and long-established financial institutions vying to replace them. With millions of potential new customers every year, crypto exchanges are using armies of lawyers and billion-dollar war chests to fight legal battles and advertise in an attempt to win business and influence legislation. Regulators in some countries are in the process of banning or restricting trading, while others seek to craft legislation to boost it, all of which could have profound impacts on the strategies each of these companies employ.
To narrow down the list of companies in this Power Index, we only ranked companies that offered trading of 10 or more cryptocurrencies, allowed transactions in the United States and were exclusively focused on crypto. This leaves out important players like Robinhood, Cash App and dozens of others that offer some form of crypto trading, but we’ll talk about what these other players mean for the industry in the “What Happens Next” section after the leaderboard.
So, which companies are leading the industry? Which exchanges might overcome regulatory hurdles, and which face a tougher challenge? And how is an explosion in asset prices and millions of dollars in advertising translating into real revenue and users?
|Power Score: 65.80||Momentum Score: 69.00 (2)||HQ: Remote||CEO: Brian Armstrong||Founded: 2012|
In the last decade, Coinbase has taken crypto mainstream and made a boatload of money doing it. The crypto industry has always grappled with a perception problem, fueled by high-profile skeptics (or begrudging acceptors) like Jamie Dimon and Bill Gates doubting the maturity and viability of alternative currencies at large. So, when Coinbase went public last year, the company was viewed as two kids in an $85 billion trench coat. But the IPO and the coming-out party for crypto that ensued have effectively convinced Wall Street of what the DeFi community has long known: Crypto doesn’t belong at the kids’ table, but in the boardroom and in hedge fund portfolios.
In the process, CEO Brian Armstrong has become a de facto mouthpiece for the crypto industry. The company is playing the provocateur in global discussions of regulatory issues, and Armstrong himself speaks directly to those concerned about crypto’s role in world affairs, a cohort that has grown in the wake of the Russian invasion of Ukraine. Coinbase has assumed that role by striking a balance between resembling the archetype of a traditionally powerful company and staying true to its mission of reinventing the financial system. Will Coinbase be able to build on its success moving forward?
|Power Score: 50.56||Momentum Score: 56.47 (7)||HQ: Nassau, Bahamas||CEO: Sam Bankman-Fried||Founded: 2019|
If you think of the crypto exchange landscape through the lens of video games, Coinbase may have found success by serving as the base game and converting a wide group of casuals into fans, but FTX has found its own success mirroring the microtransactions market and turning the die-hards into whales. FTX has 5 million users, compared to Coinbase’s 89 million (or 11.4 million monthly transacting) users, but the exchanges’ trading volumes are shockingly similar thanks to FTX’s 2,400% year-over-year volume growth. FTX’s U.S.-specific operation is smaller — trading volume “only” grew sevenfold in 2021 — but that didn’t stop the company from making a big splash on Sand Hill Road, raising $400 million at an $8 billion valuation earlier this year. The global exchange, meanwhile, has hit a $32 billion valuation. Since the company split out its U.S. arm in 2020, CEO Sam Bankman-Fried and FTX have beefed up their status as leading voices on policy, in the form of both Congressional testimony and ex-government hires. Will FTX be able to overtake Coinbase?
|Power Score: 41.33||Momentum Score: 62.35 (5)||HQ: None||CEO: Chanpeng Zhao (U.S.: Brian Shroder)||Founded: 2017|
Binance seems to understand that it’s often better to ask for forgiveness than permission. In the company’s five-year history, countries have blocked it from doing business with a trigger finger that’s as fast as Marc Andreessen’s. For a while, the company wore its regulatory red flags as badges of honor, finding increasingly creative ways to evade regulators and becoming the world’s biggest crypto exchange in the process, with volumes that are larger than its four closest competitors combined, which are OKX, KuCoin, Crypto.com and Coinbase. The scale has allowed Binance as a whole to become a true crypto power-player globally, and the company’s U.S. arm has followed in its footsteps, raising $200 million at a $4.5 billion valuation this month. But as governments across the globe have cracked down, the company has gotten more serious about compliance, which culminated with CEO Changpeng Zhao saying that he was willing to step down if regulation becomes too much of an issue (even though he’s walked back those comments to some extent). Can Binance keep its pace of growth high even with mounting regulatory pressure?
|Power Score: 39.51||Momentum Score: 63.53 (4)||HQ: New York, NY||CEO: Tyler Winklevoss||Founded: 2014|
Founded by Facebook foes Cameron and Tyler Winklevoss in 2014, Gemini joined the outside funding party that most crypto firms took part in at the end of 2021 and locked in a valuation of $7.1 billion. The company has put an emphasis on compliance as a differentiator, especially as Binance and others have come under increased regulatory scrutiny. That focus on trust led the company to receive the highest marks in the KYC/transaction risk category of a CryptoCompare analysis, a factor that’s becoming increasingly important to future growth due to European rule changes. In 2020, the company hired Elena Hughes from Morgan Stanley, who now leads a 40-plus-person compliance team as the company has worked to expand into new markets. The company’s early registration with the FCA in the U.K. has meant that, even as regulation has changed, the company has managed to avoid some of the tumult facing the other companies operating inside the territory. Will Gemini be able to court big name investors quick enough to keep pace with other exchanges?
|Power Score: 36.83||Momentum Score: 58.82 (7)||HQ: San Francisco, CA||CEO: Graham Jenkin||Founded: 2017|
CoinList wants to have it all. As an exchange, the company saw its user base grow 42-fold in 2021, albeit with a number of users that’s relatively small compared to the behemoths above it on this list. But the growth and general appetite for new crypto plays among VCs led to CoinList nabbing a $1.5 billion valuation in late 2021. And while the exchange remains a foundational — and still growing — piece of the business, much of the company’s new funding is going to support its token listing business, which investors see as the differentiator for a company that can’t match the biggest players on trading volume, even with the wild swings that crypto has gone through. Can the company keep its momentum through 2022?
|Power Score: 28.47||Momentum Score: 18.57 (10)||HQ: San Francisco, CA||CEO: Jesse Powell||Founded: 2011|
The oldest of the firms on this list, Kraken was founded in 2011 by Jesse Powell. Powell had been brought on as a contractor to help Mt. Gox’s CEO triage a 2011 hack; after seeing that exchange briefly go down, he created Kraken in part to serve as a shelter in case the now-infamous Mt. Gox were to ever close for good. (It did, after filing for bankruptcy in 2014.) After years of steady growth and acquisitions of Cryptowatch, a price-charting service, and Coinsetter, another trading platform, Kraken now processes hundreds of millions of dollars of transactions a day and has widespread regulatory approval in the U.S. On the heels of a year when Kraken was reportedly seeking funding at a $10 billion valuation, the company has also said it plans to double its headcount by the end of 2022 to over 5,000. However, the company was forced to pay a $1.25 million fine for offering margin trading without permission in September 2021, and has faced criticism for continuing to operate in Russia despite the country’s invasion of Ukraine. Overall, the company is hoping that by working closely with U.S. regulators, it can outlast companies like Binance that initially entered the market without approval. Kraken was rumored in 2021 to have plans to go public in the second half of 2022, and got a bank charter in Wyoming at the end of 2020, effectively bolstering its regulatory legitimacy ahead of any possible IPO. But those rumors have been quiet in the wake of the recent correction in the fintech market.
|Power Score: 20.58||Momentum Score: 25.00 (9)||HQ: Tokyo, Japan||CEO: Kuniyoshi Hayashi||Founded: 2014|
Another company founded in the wake of Mt. Gox’s demise, bitFlyer has grown into one of the largest cryptocurrency exchanges in Japan despite its regulatory stumbles in 2018: Japan temporarily stopped the exchange from taking new Japanese customers following issues with know-your-customer and anti-money laundering laws. The company is strongest in Japan, but it expanded into the U.S. in 2017 and Europe in 2018 following regulatory approval with the hopes of attracting a bigger user base abroad. Among the company’s leadership shakeups that put a new president at its helm, it appointed bitFlyer U.S.’s COO to be its first non-Japanese director, a further signal of the company’s global ambition. That said, bitFlyer is still trying to capitalize on its Japanese origins; the company was the first exchange to offer yen-bitcoin pair trading in the United States, aiming to give American traders the ability to leverage Japanese currency and exchange rates and access a larger pool of liquidity from that market. (Though seemingly niche, the company says the move gives U.S. customers access to a BTC/JPY spot market that is “one of the world’s largest bitcoin to fiat markets.”) Private equity firm ACA is now reportedly taking a $370 million stake in the company and its 573.2 billion yen ($4.7 billion) under management. It comes after the company grew its overall sales by 41% to $69 million.
|Power Score: 17.56||Momentum Score: 90.00 (1)||HQ: Singapore||CEO: Kris Marszalek||Founded: 2016|
|Power Score: 15.84||Momentum Score: 24.71 (8)||HQ: San Francisco||CEO: Hong Fang||Founded: 2013|
Just two years after its founding in 2013, Okcoin was among the largest crypto exchanges by volume, aided by the collapse of Mt. Gox, surging popularity of bitcoin and expanded mining activity in China, where Okcoin gained popularity. However, Okcoin greatly suffered when China banned crypto trading last year and the exchange was forced to shut down its Beijing subsidiary. Today, Okcoin struggles to attract the volume of industry heavyweights Coinbase, FTX and Binance, and has yet to find a market that can provide as much revenue as China, though exclusive rights deals to CityCoins like MiamiCoin could help the exchange reestablish higher volumes. In an attempt to boost its business elsewhere, particularly in Europe, the company partnered with Stacks, a network of decentralized finance applications, in March and pledged $165 million to supporting projects in the bitcoin ecosystem, hoping that the expansion of use cases would fuel greater adoption and thus trading revenue for the firm. Additionally, the company has brought on Randi Zuckerberg, former Facebook spokesperson and Mark’s sister, as an adviser, hoping that she can help the company attract a bigger female user base. Historically, crypto trading has been dominated by men, but Okcoin is attempting to have a 50% female user base by 2025.
|Power Score: 14.92||Momentum Score: 65.00 (3)||HQ: Seychelles||CEO: John Chen||Founded: 2004|
MEXC was founded in 2018 and gained popularity in its hometown of Singapore before expanding into Estonia and the United States following regulatory approvals in 2019. The company has since gained approval from Switzerland, Australia and Canada in a bid to quickly become a global player. As part of that global push, the company rebranded from MXC Exchange to MEXC Global in 2021, aiming to leverage its multilingual platform in more countries around the world. Rather than focus solely on the most popular coins, MEXC has aimed to attract users by offering more than 1,300 different coins, putting it in the top three exchanges by number of coins on offer. The wider array of coins has led to the company being branded as the “gem hunter,” though it means more questionable coins could slip through the cracks. The company continued its expansion in 2021 by partnering with derivatives trading company Bybit, which allows for dual listings across the exchanges and brought the combined daily trading volume to $730 million. Last year, the company also announced a joint venture with OKEx, another exchange, to put $40 million into Solana-based projects, betting that the Ethereum rival could benefit from a broader ecosystem of use cases and thus drive trading revenue for the firm.
Explore the data
The Protocol Power Index is designed to view power through a holistic lens that reflects how modern tech companies amass and exercise their strength. To do so, the Power Index takes into account 30 metrics across five categories — Economics, Leadership, Innovation, People and Politics & Policy — and synthesizes them into a single Power Score. Read our full methodology statement here.
What happens next?
Several trends could change the crypto exchange landscape in the coming years: increased crypto adoption and marketing efforts could expand user bases, regulations could bolster or prevent trading in dozens of markets and cyberattacks and scams could continue to steal millions from consumers.
The thirst for crypto might only just be getting started. The number of people using crypto exchanges has exploded: In 2015, just 1% of Americans had invested in, traded or used currency, but by 2021 that number had grown to 16%, according to Pew Research. That trend looks set to continue.
- Beyond speculative trading, cryptocurrency is being used in an expanding (though still limited) number of use cases, ranging from the purchase of NFTs to a bevy of financial products like lending via decentralized finance, or DeFi. NFTs totaled $17.6 billion in sales last year, while the number of Ethereum addresses using DeFi protocols grew 6x in 12 months to 3.4 million by September 2021, according to a report by Consensys, a research firm. With each new use case, there is increased demand from people wanting to purchase crypto.
- Additionally, successive run-ups in crypto prices have created a buzz around the assets, with more and more people seeking to trade cryptocurrencies. Natural buzz has been aided by a marketing blitz from the top crypto firms, as evidenced by anyone who watched the plethora of crypto-related ads at this year’s Super Bowl.
- This is not just a domestic trend: Exchanges have exploded in popularity in Singapore, Japan, South Korea and Europe, replete with a bevy of users (and regulators not far behind).
- Many people enter the market looking for the most common assets, bitcoin and Ethereum, which have the widest adoption in the crypto community compared to other coins so far. However, alternative coins still make up a significant portion of exchanges’ revenue. In 2021, Coinbase brought in 55% of its trading revenues from assets other than bitcoin and Ethereum. Since no single coin has emerged as the dominant cryptocurrency yet, future coins with surging popularity could significantly affect exchanges’ revenues.
- If the number of users continues to grow, traditional finance institutions may overcome their historical resistance to crypto trading to cash in on the rising tide. With stronger regulatory controls and a bigger user base, financial heavyweights like JPMorgan Chase or Goldman Sachs could outweigh the biggest players today. In a potential harbinger move, Goldman dipped its toes in the crypto waters in late March by offering over-the-counter trading on crypto options, but has yet to expand beyond this limited offering.
- And the competition doesn’t just come from legacy financial institutions, but from around fintech too, with more-traditional trading services like Robinhood and Cash App offering users a chance to get involved in what could be called the shallow end of crypto trading. Also closing in are companies like Blockchain.com, primarily a crypto wallet that subsequently opened an exchange, which nabbed a $14 billion valuation in 2022 and has acquisition plans.
With more users comes greater regulatory scrutiny. Stock trading services in the United States are governed by strict “know your customer” regulations that prevent money laundering, must have licenses to operate and are held to a litany of other regulations that enforce security and prevent users from being defrauded. While some of these regulations have transferred over to crypto trading, a patchwork of local, state and federal laws dominates currently, with no single agency or government level deciding what is and isn’t allowed.
- States are largely issuing their own licenses to operate, while a combination of the SEC and CFTC oversee exchange regulations to enforce know-your-customer and anti-money laundering laws.
- However, the delineation between each agency is not clear. This partially stems from the fact that regulators don’t know whether to treat cryptocurrency as a currency, an asset or some other category, and different agencies have come to different conclusions without clear guidance from the executive branch.
- In an effort to fix this, President Joe Biden signed an executive order in March to begin to clarify which agencies have domain in specific circumstances, as well as what should be regulated at the federal, state and local level. While the executive order indicated that the White House is committed to providing regulatory clarity, no concrete changes or recommendations have yet come out of the committee in charge of assessing the situation.
- In anticipation of regulatory changes, there’s been a flurry of lobbying spending among the major exchanges and crypto firms as each company seeks to influence the outcome of the executive order. Companies have also been bolstering their own in-house staff with key hires from federal agencies and heavily regulated industries.
- All of that is just in the United States. Internationally, many of these same concerns have popped up as well, with some countries like El Salvador and Ukraine embracing cryptocurrency while China went as far as to ban trading completely. Binance, a notorious offender of crypto regulations around the world, faces at least 10 regulatory issues across three continents as dozens of countries seek to streamline regulatory practices and clamp down on companies that might support nefarious activity.
- While Binance is an extreme example, regulatory approvals are make-or-break for all crypto exchanges, and each company is vying for approvals across the world. Notably, FTX secured a recent license in Dubai, while the new anti-money laundering chief in Estonia indicated that the country would crack down on licenses in the country.
And scams remain a big concern for crypto exchanges. Even when companies make it past the regulators, cryptocurrencies and their markets have been a prime target for hackers and scammers seeking to take advantage of security vulnerabilities and unwitting consumers. And until that’s solved, it could potentially limit the number of participants in the market.
- Coinbase announced a breach of 6,000 customer accounts last year, and smaller exchanges like Bitstamp, Kucoin and Gate.io have each suffered breaches in recent years as well.
- In addition to breaches of the exchanges themselves, several exchanges have allowed trading of coins that were later revealed to be fraudulent. Last year, a coin named after the popular Netflix show “Squid Game” scammed users out of millions while being tradeable on Binance. Other notable examples include the Ormeus coin scam that cost people more than $100 million dollars. In total, scammers stole $8 billion from unwitting crypto users in 2021, up 81% since 2020, making the field a dangerous proposition for those without the proper knowledge to vet questionable coins.
- In theory, centralized exchanges offer customers greater protection from scammers by vetting a coin’s legitimacy before listing it. However, security breaches of the exchanges themselves have proven that centralization is not necessarily the panacea it promised to be, even if some level of vetting does prevent blatant fraud.
To rank the competitors, we've developed a formula that encapsulates 30 criteria. Those criteria span five groupings that factor into power: Economics, Leadership, People, Innovation & Politics and Policy. We then developed two systems for weighting the criteria — one for measuring power and the other for measuring momentum — such that companies can be scored on a 0–100 scale. Read our full methodology here.