The top ten cryptocurrency exchanges are generating up to $3 million a day in fees, according to Bloomberg. Tax officials in India estimate the figure is even higher, putting the total annual income of the top ten is around $6.25 billion a year.
Binance made $7.5 million in fees in its first quarter after opening last year, but by March it was making more than $40 million in fees a month with their current 50% trading fee discount. Huobi has half the volume but makes even higher profits due to higher fees, around $54m a month. Even the recently started Kucoin is making $1.8 million a month.
These projections by Bloomberg are a rough estimate, because it’s impossible to know what the firms are charging, including discounts for their most active traders. Based on daily trading volume and fees listed, annual revenue for the top 10 goes into the billions of dollars.
Then there is the money to be made from charging high fees to list new coins. Business Insider reports ICOs are being charged between $50,000 and $1 million to list their new coins, depending on the size and popularity of the exchange. Listing on Binance reportedly costs between $350,000 and $1 million USD.
Exchanges have also seen amazing growth in their own coins too. The Huobi token increased 64 percent to its peak despite launching in challenging market conditions in February. KuCoin Shares, which launched in September, increased by 2,738 percent to its all time high. However, the standout is Binance Coin which is up 22,000 percent to its all time high, and is currently 12,000 percent up on launch. It’s made everyone who invested in the Binance ICO very wealthy.
Gil Luria, an equity analyst at D.A. Davidson & Co, said:
“The exchanges and transaction processors are the biggest winners in the space because they’re allowing people to transact and participate in this burgeoning sector. There’s a big business there and it would not surprise me if they’re making hundreds of millions of dollars in revenue and possibly even billions a year.”
It takes a lot of money, time and regulatory hassles to launch an exchange, which is why there are only 170 worldwide taking advantage of this explosive growth in crypto. However, as the market opens up with the arrival of platforms for crypto exchanges such as 0x and Waves making the barrier to entry lower, there is sure to be a surge in the number of new crypto exchanges arriving in 2018 and beyond.