Binance BUSD Market cap dips below $1 Billion, further proving the fact that the stablecoin is running on its last legs.
Binance USD has dropped below $1 billion in terms of market capitalization for the first time since 2020. The downfall of the BUSD stablecoin was written when the issuer of the stablecoin Paxos, was indicted by the New York Department of Financial Services (NYDFS) to stop issuing new stablecoins.
The NYDFS ordered Paxos to stop issuing new BUSD tokens in February 2023 due to concerns about Paxos’ oversight of its relationship with Binance.
The regulatory body identified several unresolved issues related to Paxos’ monitoring and management of its partnership with Binance regarding BUSD. These issues likely involved regulatory compliance, transparency, and potential risks associated with Binance’s operations. There were additional concerns about Paxos’ ability to effectively oversee and control the issuance and usage of BUSD within the Binance ecosystem.
BUSD Market Cap stands at $775M
The action followed a Wells notice from the U.S. Securities and Exchange Commission (SEC) to Paxos, indicating a potential lawsuit alleging BUSD as an unregistered security after which Paxos agreed to stop issuing new BUSD and announced the termination of its relationship with Binance for BUSD issuance.
Binance later announced that it would stop providing support for the BUSD tokens on 15 December 2023. Those who are still holding BUSD tokens were given a deadline of February 2024 to convert their BUSD balances to FDUSD (a stablecoin issued by FD121 Ltd.) at a 1:1 ratio with zero fees.
Apart from FDUSD, Binance has also promoted TrueUSD as an exchange option for the BUSD, therefore confirming that BUSD will soon be phased out by the exchange.
The current circulating supply of BUSD is standing at 775 million tokens at the time of writing this article, reflecting a significant 97% decrease from its highest supply of 23.45 billion tokens.
Interestingly, there has been a slight deviation in the token’s peg. According to data from CoinGecko, over the past 24 hours, BUSD has traded within the range of $0.9696 to $1.01.
However, as of the present moment, it has reverted to being pegged to the dollar, but as the deadline approaches, holders of BUSD would vary in converting them to other stablecoins fast if they don’t want to lose the value of the funds they are currently holding in the form of BUSD.
Alternate to BUSD?
The recent decline of BUSD has had a significant impact, prompting a re-evaluation of the established stablecoin order.
While USDT maintains its dominant position with a market cap surpassing $94 billion, emerging contenders are actively vying for prominence, propelled by strategic maneuvers within the Binance ecosystem.
USDT
Despite regulatory scrutiny and speculation regarding its peg, Tether’s USDT remains the indisputable leader, commanding over 70% of the market. Its widespread adoption underscores its strong position, offering stability—albeit occasionally questioned—and a sense of reassurance to a substantial segment of the crypto community.
USDC
Circle’s USDC holds the second spot with an impressive market cap of $24.56 billion, marked by its strong dedication to following regulations.
Its clear transparency and close connections with traditional financial institutions have built confidence, establishing USDC as a reliable option compared to the sometimes unclear circumstances associated with USDT.
TUSD and FDUSD
Following the decrease in BUSD’s popularity, two stablecoins linked to Binance, TUSD and高仿迪奧 FDUSD, are gaining attention.
TUSD, which was previously not widely noticed, has seen its market value rise as Binance encourages it as a dependable option.
Yet, the real focus is on FDUSD, a recently launched stablecoin that appears to have been chosen by Binance to replace BUSD.
