- Binance’s BUSD stablecoin has experienced a drop in its market cap, leading to a slip in its stablecoin ranking.
- Paxos has terminated its relationship with Binance.
- The SEC has filed lawsuits against Binance and its CEO.
The Binance-branded stablecoin, BUSD, has encountered another setback, witnessing a substantial decline in its market capitalization by $1 billion. This development has resulted in BUSD slipping to the fourth position among stablecoins.
BUSD Slips to Fourth Place as DAI Stablecoin Gains Traction
Recent data from CoinMarketCap reveals that Binance USD (BUSD) currently holds a market capitalization of approximately $4.3 billion, marking a notable decrease from its previous $5.5 billion just a month ago.
Consequently, BUSD has slipped to the fourth position among stablecoins, closely trailing behind the decentralized stablecoin DAI, which has experienced a surge in market cap, surpassing $4.6 billion.
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Tether’s USDT and USD Coin (USDC) dominate the stablecoin market. USDT boasts a market cap of around $83 billion, while USDC holds approximately $28 billion in market capitalization.
SEC Lawsuits Shake Up Binance and BUSD
The decline in BUSD’s market cap can be attributed to regulatory actions taken by the New York Department of Financial Services (DFS). Following concerns regarding Paxos, the crypto firm responsible for issuing BUSD, the DFS ordered the halt of BUSD token minting. The DFS cited unresolved issues concerning Paxos’ oversight of its relationship with Binance.
Moreover, the Securities and Exchange Commission (SEC) issued a Wells Notice to Paxos, signaling its intention to sue the company over its BUSD issuance. The SEC argues that BUSD qualifies as an unregistered security.
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Consequently, Paxos announced the termination of its relationship with Binance, discontinuing the issuance of new BUSD tokens effective February 21. However, Paxos will continue supporting and redeeming BUSD tokens until at least February 2024.
Adding to the challenges faced by the Binance-branded stablecoin, the SEC has filed lawsuits against Binance and its CEO, Changpeng Zhao. The agency alleges that Binance illegally operates a securities exchange, offering unregistered securities to the general public, including its Binance Coin (BNB) token and BUSD stablecoin.
On the Flipside
- Despite the decline in market capitalization, BUSD remains a prominent stablecoin in the crypto market.
- Binance’s termination of its relationship with Paxos demonstrates its commitment to complying with regulatory requirements and addressing concerns raised by authorities.
- The SEC’s lawsuits against Binance and its CEO indicate a growing focus on enforcing securities regulations in cryptocurrency, which could ultimately contribute to a more regulated and transparent industry.
Why This Matters
The recent decline in BUSD’s market capitalization, coupled with the regulatory actions against Paxos and Binance, highlights the challenges stablecoins face in the cryptocurrency industry, emphasizing the need for increased compliance measures and transparency.
To learn more about Tether’s CTO Paolo Ardoino addressing USDT depeg concerns, read here:
Tether’s CTO Paolo Ardoino Addresses USDT Depeg Concerns
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