Binance-Backed Stablecoin BUSD Drops to Fourth Place Among Stablecoins After Losing $1 Billion in Market Cap
According to CoinMarketCap statistics, the market value of the Binance-branded USD stablecoin (BUSD) has dropped significantly, falling by $1 billion to about $4.3 billion. This brings BUSD behind decentralized stablecoin DAI, whose market worth just topped $4.6 billion, and puts it in fourth place among stablecoins.
The two biggest stablecoins at the moment are USDT from Tether and USDC Coin (USDC), which have market values of over $83 billion and $28 billion, respectively.
Following the New York Department of Financial Services’ (DFS) directive to Paxos, the cryptocurrency company in charge of generating the stablecoin, to suspend the minting of BUSD tokens, BUSD’s market capitalization has decreased. The DFS justified the ruling with concerns about Paxos’ management of its dealings with Binance.
The US Securities and Exchange Commission (SEC) subsequently signaled its intention to prosecute Paxos for the issuing of BUSD by sending the business a Wells Notice, it was later disclosed. According to the SEC, BUSD is a kind of unregistered securities.
Paxos declared the end of its partnership with Binance in reaction to the regulatory proceedings, stopping the creation of additional BUSD coins as of February 21. But until at least February 2024, Paxos will support and redeem the tokens.
The SEC has filed litigation against Binance and its CEO, Changpeng Zhao, claiming the improper operation of a securities exchange, adding to the difficulties faced by the Binance-backed stablecoin. Including its Binance Coin (BNB) cryptocurrency and BUSD, the government charges Binance of marketing unregistered securities.
Separately, due to unbalanced trade on significant stablecoin pools, Tether’s USDT briefly lost its dollar peg. A massive sell-off resulted from this imbalance, with traders exchanging tens of millions of USDT for USDC and DAI. Despite this brief setback, Tether has recovered from the market value loss it suffered in 2017 and now has a market capitalization of more than $83.2 billion.
Tether was able to recuperate lost market value, while other stablecoins have not had the same success. The market valuation of USDC, the second-largest stablecoin, is presently about $29 billion, a considerable decline from its peak value of over $56 billion, according to CoinGecko.