The supply of Binance USD (BUSD), the third-largest stablecoin, has decreased by 60% since the middle of February, and it is running out quickly. The market value of the stablecoin has fallen from just over $16 billion to around $10 billion at this time.
Also, from almost 20% last year, its market share has decreased to 7.3% today. At $5 billion in total supply, MakerDAO’s decentralized stablecoin DAI is the fourth biggest cryptocurrency. Tether’s (USDT) market share has climbed to 52% as a result of investors’ reorientation.
The U.S. Securities and Exchange Commission is to blame for the BUSD depreciation (SEC). The agency began action against Paxos, the Binance stablecoin’s issuer, on February 13. While stablecoins have not yet been formally designated as securities, the federal regulator classed it as such in accordance with its standard operating procedure.
As a consequence, the crypto company under New York regulation said that it will stop producing BUSD.
The Financial Times of London reported on March 1 that experts believed the outflow might have a negative impact on Binance’s financial performance.
Ilan Solot, co-head of digital assets at Marex Solutions, predicted that this would negatively affect Binance’s financial performance since BUSD accounts for a significant portion of the company’s revenue.
“If Binance does in fact receive 90% of its income from transaction fees, then it is probable that a decline in total volumes would put some pressure on the exchange’s revenue,” said David Moreno Darocas, research head at data provider CryptoCompare.
Coinbase also disclosed that it will delist BUSD since it “no longer satisfied our listing requirements” for stablecoins. Industry watchers claim that it was a covert strike on Binance as US officials step up their campaign against cryptocurrencies.
Changpeng Zhao, CEO of Binance, said that BUSD was never a “major business” for the exchange. He also said Binance wanted to support as many alternative stablecoins as it could.BNB, a native currency of Binance, has lost 4% of its value over the previous week and fell below $300 on Thursday morning in Asian trade.
