Mar 03, 2023
BUSD Market Cap Plummets Below $10B
The market cap of Binance USD (BUSD) has plummeted to its lowest level in almost two years, with the total market cap of the stablecoin now below $10 billion. This comes after a series of regulatory crackdowns in the United States and a planned delisting from a major crypto exchange.
BUSD’s market cap has been in freefall since its all-time high of $23.49 billion on Nov. 15, shortly after the collapse of FTX. As of today, the stablecoin’s marketcap has dropped to $9.66 billion — levels not seen since Jun. 29, 2021.
The US Securities Exchange Commission (SEC) recently filed a potential lawsuit against Paxos, the issuer of BUSD, on Feb. 12 over possible violations of investor protection laws. This has been a major contributing factor to the stablecoin’s market cap decline, with $6.65 billion being shaved off the total market cap.
Adding to the downward pressure on BUSD’s market cap was the New York District of Financial Services (NYDFS) ordering Paxos to cease the minting and issuing of BUSD on Feb. 12. This was followed by cryptocurrency exchange Coinbase announcing on Mar. 13 that it will be delisting BUSD from its exchange, citing that the stablecoin “no longer met our listing standards”.
The wider crypto market has also seen a drop in market cap, which is likely related to the controversy surrounding Silvergate Bank with the late filing of its annual 10-K financial report on Mar. 1.
When BUSD was launched in September 2019, it quickly rose to become the third largest stablecoin behind Tether (USDT) and USD Coin (USDC). It is currently in 10th position in terms of market cap across all cryptocurrencies, with the next crypto token on the list being Solana (SOL) with $7.98 billion in market cap.
Binance CEO Changpeng ‘CZ’ Zhao recently revealed in a Twitter Spaces that he never thought very highly of the Binance stablecoin project and even thought it “may fail” when it first rolled out.
To account for the fall in demand for BUSD, Binance recently minted nearly $50 million worth of TrueUSD (TUSD) as the cryptocurrency exchange looks to diversify its stablecoin holdings.
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