BUSD, or Binance USD, the dollar-pegged stablecoin from the United States, now sits at the fourth position in market capitalization amongst the other stablecoins. This follows a major dip of over $1 billion in the last 30 days, according to data that was received from CoinMarketCap. The market cap of the cryptocurrency stands at $4.3 billion, which is a regression of 29% from $5.54 billion on the 18th of May.
The stablecoin has been in a downward trend since December 2022, when the market cap has gone up by $23 billion. The decline in the market cap of the stablecoin does parallel some of the major developments that have surrounded Binance, after following the dramatic collapse of FTX in November 2022. In December 2022, a report indicated that the Department of Justice could be targeting Binance, which led to net withdrawals of $3.6 billion in just seven days. The exchange also saw massive redemptions of the stablecoin from market makers.
Paxos Was Previously Asked To Stop Issuing BUSD
Next, a partnership between Paxos Trust and Binance created the BUSD stablecoin in September 2019. As it has turned out, Paxos owns and issues this product, while Binance has ended up licensing its brand. For Paxos, the partnership did bring about certain new challenges. In February, the company had been served with a Wells notice from the SEC alleging that the stablecoin was an unregistered security.
This investigation then led the New York Department of Financial Services to order Paxos to stop issuing BUSD. On the whole, these episodes did end up taking quite a significant bite out of the market share of the cryptocurrency, which dropped from $15.88 billion on 12th February, to $8.38 billion on 13th March.