Why Trading Volume Is Dropping After Crypto Restrictions in 2025

Crypto & Blockchain Why Trading Volume Is Dropping After Crypto Restrictions in 2025

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How Regulations Affect Trading Volume

Based on 2025 data, this tool estimates volume changes based on your jurisdiction and exchange compliance status.

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Trading volume in crypto markets has been falling hard since early 2025 - and it’s not because prices are down. Bitcoin hit a new all-time high above $110,000 in May. Ethereum broke $4,000. Altcoins were flying. But something strange happened: trading volume crashed. On major exchanges, spot trading volume dropped 27.7% quarter-over-quarter. That’s not a correction. That’s a collapse - and it’s directly tied to new government rules.

What’s Really Causing the Drop?

It’s not fear. It’s not a bear market. It’s regulation.

In 2023, crypto exchanges could operate with loose rules. You could trade anything, anywhere, with minimal ID checks. By 2025, that’s over. The U.S. passed the GENIUS Act, requiring stablecoins to be 1:1 backed by U.S. dollars and registered with federal regulators. The EU rolled out MiCA, forcing exchanges to get licenses or shut down. India tightened tax reporting. Japan raised capital requirements. Suddenly, exchanges had to choose: comply or lose access to millions of users.

The result? Massive volume drops. Crypto.com, once the second-largest exchange globally, saw its quarterly trading volume plunge 61.4%. It went from $560 billion in Q1 to just $216 billion in Q2. Why? Because it chose to follow U.S. rules instead of moving offshore. Other exchanges like MEXC and Bitget grew because they relocated to places like the UAE or Singapore - where rules were clearer or lighter.

It’s Not Just One Country - It’s a Global Patchwork

Regulations aren’t uniform. That’s the problem.

In Switzerland and Japan, where rules are clear and predictable, volume declines were mild - around 7-8%. Traders knew what was allowed. They could plan. In the U.S., India, and parts of Europe, where rules changed fast or were ambiguous, volume dropped 20-25%. Some exchanges froze trading on entire token categories overnight. One user on Reddit said their portfolio lost 37% of its tradable assets because their exchange delisted coins that didn’t meet new U.S. compliance standards.

Even stablecoins - the backbone of crypto trading - got caught in the crossfire. USDT and USDC still moved over $1 trillion a month. But smaller stablecoins like EURC, created under the EU’s MiCA rules, exploded from $47 million to $7.5 billion monthly in just a year. Why? Because institutions finally trusted them. They knew they were legal. That’s the difference: regulation doesn’t kill volume - bad regulation does.

Price Up, Volume Down - The Market Is Broken

Normally, when Bitcoin surges, traders rush in. Volume spikes. That’s how markets work.

In Q2 2025, Bitcoin rose 30%. Volume fell 27.7%. That’s never happened before. It means people aren’t trading. They’re holding. Why? Because they can’t. Exchanges have restricted access. Withdrawals are delayed. New coins are banned. Even if you believe the price will go higher, you can’t act on it.

This isn’t speculation. CoinGecko’s data shows it. Bitwise’s report confirms it. Even JPMorgan admitted the disconnect is “unprecedented.” The market is still alive - but it’s fragmented. Traders in the U.S. can’t access the same coins as traders in Dubai. Liquidity is broken.

Two traders contrast: one trapped by U.S. rules, another thriving in UAE with stablecoins flowing across continents.

Who’s Winning? Who’s Losing?

The winners aren’t the big names. They’re the quiet ones.

Exchanges that moved to clear regulatory zones - like Bitget in the UAE, MEXC in Singapore, and OKX in the Caymans - grew. They didn’t fight the rules. They adapted. They got licensed. They built compliant products. Their volume went up.

The losers? Exchanges that stayed put and tried to ride out the storm. Crypto.com. Binance (which lost U.S. users after exiting the market). Kraken, which spent $100 million on legal fees just to stay in the U.S.

Institutional investors are shifting too. They’re pouring $5.95 billion into crypto ETFs in a single week. Why? Because ETFs are regulated. They’re safe. They don’t require you to touch a crypto exchange. You buy through Fidelity or BlackRock. You don’t need to worry about token delistings or KYC delays.

What’s Happening to Real People?

Behind the numbers are real users.

On Trustpilot, average ratings for major exchanges dropped from 4.3 to 2.5 stars in Q1 2025. Why? Users complained about:

  • Sudden delistings of coins they owned
  • Extended verification processes (some took 3+ weeks)
  • Withdrawal limits imposed without warning
  • Accounts frozen over minor compliance flags
One trader in Texas posted: “I held BTC for three years. When I tried to sell in April, my account was locked for 47 days because I traded a coin that got flagged. I missed the $110K rally. Now I’m done.”

But not everyone is angry. In Switzerland, users report higher trust. “My volume dropped 15% at first,” said a user on r/CryptoSwitzerland. “But now I’m trading more than before. I know my money is safe. No scams. No rug pulls. That’s worth the slowdown.”

A fractured world map shows volume collapse in the U.S. and EU, while regulated hubs glow with trading activity.

Is This the End of Crypto Trading?

No. But it’s the end of the wild west.

Crypto transaction volume hit $10.6 trillion in 2024 - up 56% from 2023. Even with restrictions, activity didn’t vanish. It just moved. More trading is happening through regulated ETFs. More stablecoins are being issued under clear rules. More institutions are entering through compliant channels.

The TRM Labs 2025 report found illicit crypto volume dropped from 0.9% to 0.4% of total activity - a 51% drop. That’s good. It means crypto is becoming less risky, less criminal, less chaotic. But it also means the old model - fast, anonymous, unregulated trading - is gone.

What Comes Next?

By late 2025, the worst of the volume drops should stabilize. Exchanges have restructured. Users have adapted. The U.S. and EU frameworks are now live. The market is sorting itself out.

Experts at JPMorgan predict stablecoins will drive $1.4 trillion in new dollar demand by 2027. That’s not a decline. That’s growth - but only if regulation stays clear and consistent.

The lesson? Regulation doesn’t kill crypto. Confusion does. When rules are messy, traders leave. When rules are fair and predictable, money flows in - even if it takes longer to get there.

If you’re still trading on an exchange that feels unstable, check its license status. If you’re holding tokens that got delisted, don’t panic - move them to a compliant wallet. The market isn’t dying. It’s growing up.

What’s the Real Impact?

The crypto market cap rose from $2.62 trillion in Q1 2025 to over $4.2 trillion by October - despite the volume drop. That’s because the value of Bitcoin and other major coins went up. But trading volume is the lifeblood. Without it, liquidity dries up. Spreads widen. Slippage gets worse. Even if you believe in crypto, you need a functioning market to make money.

The bottom line: restrictions aren’t the enemy. Uncertainty is. Clear rules, even if strict, create confidence. And confidence brings volume back - eventually.

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6 Comments

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    Casey Meehan

    November 29, 2025 AT 05:54
    Bro, this is why I switched to decentralized DEXs 🚀 No KYC, no delistings, no BS. Volume’s down on centralized exchanges? Yeah, because the sheep are getting sheared. Real traders are on Uniswap, PancakeSwap, or Arbitrum. The ‘regulated’ exchanges are just crypto banks now. 😅
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    Tom MacDermott

    November 29, 2025 AT 10:52
    Oh wow. Another ‘regulation is good’ think piece. Let me guess-you also think pineapple on pizza is ‘a necessary evolution.’ The market didn’t collapse. It was *evicted* by bureaucrats who think they know what ‘safe’ looks like. Meanwhile, real liquidity moved to places where people still believe in freedom. Congrats, you just helped kill the wild west. Now we have
 regulated theme parks. 🎱
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    Martin Doyle

    December 1, 2025 AT 01:08
    You’re all missing the point. This isn’t about regulation-it’s about *execution*. The U.S. didn’t ban crypto, they just made it so expensive and slow to comply that only megabanks can survive. Kraken spent $100M? That’s a death tax on innovation. Meanwhile, Bitget in Singapore just added 3M users. The future isn’t in Washington. It’s in Dubai, Singapore, and maybe even Switzerland. Stop crying. Adapt or get left behind.
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    Susan Dugan

    December 2, 2025 AT 08:23
    I was skeptical at first, but honestly? This made me feel better. đŸ€— I used to rage-quit every time my favorite token got delisted. Now I only hold coins on exchanges that clearly list their licenses. It’s slower, yeah-but I sleep better. And guess what? I’ve actually been trading more because I’m not scared of my account getting frozen. Regulation isn’t the enemy. Fear of the unknown is. We just needed a reset. đŸ’Ș
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    SARE Homes

    December 3, 2025 AT 01:41
    LMAO. You call this ‘growth’? 27% volume drop and you’re celebrating ETFs? You’re a fool. ETFs are just Wall Street’s way of sucking the soul out of crypto. You think BlackRock cares about decentralization? They care about fees. They care about control. You traded crypto for the freedom. Now you’re buying a mutual fund with ‘BTC’ in the name. Pathetic. And don’t even get me started on MiCA-EU bureaucrats think they can regulate blockchain like it’s a bakery. đŸ„
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    Grace Zelda

    December 3, 2025 AT 18:24
    The real question isn’t whether regulation killed volume-it’s whether we even want the old volume back. Remember when you could buy a rug-pull coin with 100x leverage and 0 KYC? That wasn’t freedom. That was gambling with someone else’s life savings. I’m not saying this is perfect. But if we want crypto to survive the next decade, we need to outgrow the Wild West phase. Maybe the market’s not broken
 maybe it’s just maturing.

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