The stablecoin pegged to the US dollar; Binance USD (BUSD), now occupies the fourth position in market capitalization among the other stablecoins, after a fall of more than USD 1,000 million in the last 30 days, according to show data from CoinMarketCap.
At press time, BUSD’s market capitalization is $4.3 billion, down 29% from $5.54 billion on May 18. The stablecoin has been on a downtrend since December of last year, when its market capitalization topped $23 billion.
The fall in BUSD’s market capitalization parallels the significant events surrounding Binance following the dramatic collapse of FTX in November 2022. Last December, a news item indicating that Binance would be under the US Department of Justice’s scrutiny. The US triggered net withdrawals of $3.6 billion in seven days. The exchange saw large trades of BUSD from market makers, including over $245 million from Jump Finance.
A partnership between Binance and the Paxos Trust created the BUSD stablecoin in September 2019. Paxos issues and owns the product, while Binance licenses its brand. For Paxos, the partnership brought new challenges. In February, it was reported that the company received a Wells Notice from the United States Securities and Exchange Commission alleging that Binance USD was an unregistered security.
The investigation led the New York Department of Financial Services (NYDFS) to order Paxos to stop issuing BUSD. Taken together, these episodes had a significant impact on BUSD’s market share, which went from $15.88 billion on February 12 to $8.38 billion on March 13.
The most recent blow came from the SEC’s lawsuit against Binance on June 5 for allegedly offering unregistered securities. The US regulator filed 13 charges against the exchange, including unrecorded offers and sales of BNB and BUSD tokens.
The dominance of the US dollar-pegged stablecoin market has seen some changes in the past year, with Tether (USDT) reaching its all-time high again, while most stablecoins are declining.
USD Coin (USDC), from Circle, saw its market share decline from 34.88% in May 2022 to 23.05% in May 2023. BUSD’s market share plummeted from 11.68% to 4.18% in the same period, while the Dai stablecoin (ICD) stood at 3.66%, below the 4.05% of May 2022.
On the other hand, Tether’s USDT is gaining ground. The stablecoin’s market dominance stood at 65.89% in May, up from 47.04% a year ago. Its market capitalization has risen to $83.1 billion, while USDC has fallen from a high of $55 billion to $29 billion.
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