Cryptocurrency exchange Binance (CRYPTO: BNB) lost 16% of its market share of trade volume in recent weeks.

The loss follows the decision to end its zero-fee trading program and a lawsuit by the Commodity Futures Trading Commission (CFTC).

Despite the decline, Kaiko reports that Binance remains the largest crypto exchange in the world with 54% dominance.

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Observers have noted that Binance's excess volume largely vanished with the end of zero-fee trading, resulting in an even dispersal in market share among remaining exchanges.

Upbit is the only exchange out of 17 analyzed to claim a significant share of volume, although recent volume on the Korean exchange is concentrated in Ripple (CRYPTO: XRP) trading pairs.

The regulatory crackdown has resulted in increasing pressure among remaining exchanges, particularly in the fragile U.S. market. Meanwhile, Bittrex is shuttering U.S. operations and Coinbase's (NASDAQ:COIN) market share dropped from a weekly average of 60% to just 49% throughout Q1.

Binance.US's market share tripled from just 8% to over 24% despite a lawsuit against the global entity.

Despite the uncertainty in the exchange space, trade volume continued to soar and hit four-month highs in mid-March, remaining at consistently high levels amid a wider market rally.

However, volumes began to drop sharply after Binance shut down its zero-fee program.

In the meantime, crypto markets have enjoyed stellar first-quarter performances. Bitcoin (CRYPTO: BTC) enjoyed gains of 70% year-to-date, likely due to the banking sector crisis.

Other tokens that enjoyed outsized returns include Solana (CRYPTO: SOL) and Lido's (CRYPTO: LDO) token, which traders flocked to ahead of Ethereum's (CRYPTO: ETH) upcoming Shanghai upgrade and a wider crackdown on centralized services in the U.S.

The Ethereum network will undergo a key upgrade on April 12, and analysts expect significant market activity.

Overall, both BTC and ETH have suffered in the aftermath of the FTX collapse and banking crisis, with fewer market makers supplying liquidity to order books. 

The ongoing regulatory crackdown has resulted in an uncertain dynamic among the world's largest exchanges, leaving an unclear picture of the future of the cryptocurrency market structure.

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