Competition for global crypto derivatives market dominance heats up

At the start of October, the crypto market was faced with extremely tumultuous financial conditions, thanks in large part to the recent filings against BitMEX, which saw the company's top brass being indicted by the United States Commodity Futures Trading Commission on several charges.

In the midst of all this, the crypto derivatives market also witnessed a major development in the form of Binance overtaking Huobi and OKEx to become the largest crypto derivatives exchange by volume for the month of September, with the platform recording a total trade volume of $164.8 billion for the month.

According to a Binance spokesperson, one of the key drivers that helped spur the recent market performance was user feedback, especially in regard to the less-than-ideal trading experiences that many customers had previously faced on other derivatives exchanges: "They told us about system outages or instability, interfaces that weren't user-friendly, and that all the exchanges then were only offering incentives for market makers, which created a lopsided environment that disadvantaged market takers."

Another event that may have bolstered market confidence in Binance's derivatives arm was Black Thursday, or March 12, a day that greatly impacted both traditional and crypto markets.

The Binance spokesperson noted: "There's also better awareness on how we balance Bitcoin and altcoins; altcoin futures volumes make up around 40% on Binance. We think we understand and reflect market conditions well."

While September saw Binance lead the derivatives roost, heading into October, OKEx is leading all Bitcoin futures exchanges in terms of Bitcoin futures open interest.

From a more technical standpoint, open interest serves as an indicator of options trading activity and whether or not the total amount of money coming into the derivatives market is increasing.

"Trading volume is a very important metric but it is not the only metric to keep in mind when assessing the overall health and popularity of an exchange. OKEx has been laser-focused on DeFi lately as well and this move from Binance in derivatives is a signal for us that we cannot take our attention from our flagship product."U.K. ban on local derivatives market could hurt.

On Oct. 11, the United Kingdom's Financial Conduct Authority - the country's principal finance regulator - issued a blanket ban prohibiting crypto service providers from selling derivatives and exchange-traded notes to retail investors.

While the U.K. derivatives market may not be large in comparison to others, the fact that a prominent regulator such as the FCA continues to claim that "Cryptoassets are causing harm to consumers and markets" is rather alarming for the industry.