Binance BUSD Drops $1 Billion in Market Cap, Falls to Fourth Among Stablecoins – What's Going On?Tuesday June 20, 2023
Binance-branded BUSD stablecoin has lost another $1 billion in market cap, descending to the fourth position among stablecoins.
The Binance USD (BUSD) stablecoin currently has a market cap of around $4.3 billion, down from $5.5 billion a month ago, data by CoinMarketCap shows.
This places BUSD in fourth position among stablecoins and right behind decentralized stablecoin DAI, which has seen its market cap rise to more than $4.6 billion over the past couple of days.
Tether's USDT and USDC Coin (USDC) are the two largest stablecoins in the market, each with a market cap of around $83 billion and $28 billion, respectively.
BUSD's continued decline in market cap comes after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues the stablecoin, to stop minting BUSD tokens.
In a consumer alert, the DFS said it issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”
Subsequently, it was revealed that the SEC had issued a Wells Notice to Paxos and plans to sue the company over its BUSD issuance. The agency argued that BUSD is considered an unregistered security.
Following the regulatory clampdown, Paxos announced it would “end its relationship with Binance” and would stop issuing new BUSD tokens from February 21. However, the company will continue to support and redeem the tokens until at least February 2024.
In another blow to the Binance-branded stablecoin, the SEC has launched lawsuits against Binance and CEO Changpeng Zhao, accusing the firm of illegally operating a securities exchange.
The agency accused Binance of breaking the law by offering unregistered securities to the general public, including its Binance Coin (BNB) token and BUSD stablecoin.
Tether Briefly Loses Peg As Sell-off Intensifies
Last week, USDT lost its dollar peg after two major pools for stablecoin trading became heavily imbalanced.
At the time, USDT balances on Curve’s popular 3pool, a stablecoin swapping pool comprised of USDT, USDC, and DAI, rose to over 70%, suggesting traders had swapped tens of millions of USDT for USDC and DAI.
The selling pressure on USDT came days after the largest stablecoin in the market saw its market capitalization hit a new record high, exceeding $83.2 billion.
The stablecoin managed to recover the $20 billion in market value it had lost following the collapse of rival stablecoin TerraUSD last year.
While Tether has managed to recover the market value it lost last year, other stablecoins have not been this successful.
For instance, USDC, the second-largest stablecoin, currently has a market cap of around $29 billion, far less than its all-time high record of over $56 billion, according to data by CoinGecko.