AfCFTA | African Countries to Adopt Pan-African Payment and Settlement System (P...

Binance, the leading global cryptocurrency exchange, has experienced a decline in its market share in spot trading, dropping to 40% in the past month, from 62% a year ago.

As per a report by blockchain analytics firm, 0xScope, published in November  2023, Binance has witnessed a decrease in market share, with a loss of one-third of its share in the past 12 months.

“Binance’s spot trading volume has seen a significant decline in the past year, perhaps due to its listing strategy,” researchers wrote.

“Most popular coins experienced a downturn immediately after being listed on Binance.”

• South Korean exchange, Upbit, and global platform, Coinbase, rank second and third, respectively, showing their advantages in spot trading.

• OKX and MEXC complete the list of spot exchanges with more than 5% market share, with the rest of the exchanges getting 3.2% or lower.

All cryptocurrency trading volumes considered, encompassing both spot and derivatives trading:

• Binance’s market share stood at 51.2% in October 2023
• OKX at 13.4%
• Bybit at 9.6%
• Bitget at 7.0%
• MEXC Global at 6.9%

“Despite still being in the lead, Binance saw its gap shrink against main competitors, such as OKX and other second-tier exchanges,” researchers wrote, noting that its overall market share stood at 54.6% in October 2022.

Binance’s derivatives market share has been relatively stable, staying at around 50% in the past year, but it has recently decreased to about 45%, 0xScope said.

The top five centralized exchanges ranked in terms of assets value (Binance, Coinbase, Bitfinex, OKX, Kraken) account for over 80% of the total market exchange funds. Binance still dominates other exchanges in this regard, but its market share has declined by about 5% in the past year (50%->45%), 0xScope said.

“The lost share may have been taken by OKX and Coinbase, two of Binance’s main competitors, as both exchanges have seen an increase in their share of funds in the past year.”

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Africa is set to adopt the Pan African Payment and Settlement System (PAPSS) by February 2024, according to Kenyan President, William Ruto.

The system offers an alternative in which participants can conduct transactions in their currencies eliminating the necessity for a third-party currency such as the U.S dollar.

According to Ruto, Kenya will host the system.

“Kenya is a champion [of Africa’s integration] and we have been asked to host the headquarters of the pan-African payment system in Kenya,” Ruto told participants at the launch of AfCFTA’s Trade and Development Centre at the Strathmore University in Nairobi, Kenya.

“Because we are leaders in the technology space and promoters of AfCFTA and any institution that supports the integration of our continent, we have gladly accepted to host the headquarters of the Pan-African Payment System [PAPSS] in Kenya.”

The platform, developed by the African Export-Import Bank (Afreximbank) with the backing of the African Union (AU), allows a trader in a participating country to direct their local bank to make a payment to a supplier in a different country using the local currency.

Subsequently, her bank sends instructions to PAPSS to execute the payment through the local bank of the supplier settling the transaction in the currency of the supplier’s jurisdiction in real-time. PAPSS is responsible for conducting validation checks before transmitting the instructions to the recipient bank.

Key participants in the PAPSS system are central banks, which will act as regulators and clearance agents, commercial banks, fintech companies, payment service providers to their customers, including businesses across the region.

In June 2023,  five of Africa’s top Commercial Banks committed to facilitating cross-border trade using the Pan-African Payment and Settlement System (PAPSS).

The banks included:

• Ecobank (Togo)
• Access Bank (Nigeria)
• UBA Group (Nigeria)
• Kenya Commercial Bank (Kenya)
• Standard Bank (South Africa)

Africa’s continental market has a combined GDP of around $3.4 trillion and a population of over 1.3 billion. However, the region has the world’s lowest intra-regional trade volumes, standing at 18%, in stark contrast to Europe’s 70% and Asia’s 59%.

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