According to cryptocurrency pricing tracker CoinGecko, BUSD’s circulating supply decreased to $15.4 billion on Wednesday, a drop of $1 billion in a week and $2 billion in a month.
Binance’s BUSD stablecoin has extended its previous losses, owing to mismanagement difficulties regarding the exchange’s pegged tokens that exposed earlier this month, among other calamities.
According to cryptocurrency pricing tracker CoinGecko, BUSD’s circulating supply decreased to $15.4 billion on Wednesday, a drop of $1 billion in a week and $2 billion in a month. The recent decrease extended BUSD’s decline from $22 billion in early December, when worried users hurried to withdraw assets from Binance after the company botched a report on its digital asset holdings.
BUSD is a dollar-pegged stablecoin created by New York-based fintech firm Paxos Trust under the Binance brand, and it is backed by cash and US Treasury bill reserves. Stablecoins are used by traders as an intermediary to convert traditional fiat money to digital assets and to enable cryptocurrency trading.
The latest drop follows complaints of issues impacting the exchange’s wrapped token derivatives known as Binance-peg tokens.
ChainArgos, a blockchain research firm, discovered earlier this month that Binance-pegged BUSD was not always completely backed by reserves during 2020 and 2021. Binance recognised the incident and stated that it has been corrected.
Bloomberg reported this week that the exchange combined customer funds with the collateral of Binance-peg coins.
Binance’s banking partner Signature Bank will suspend payments of less than $100,000 utilising the SWIFT interbank messaging system beginning Feb. 1.
Because of the recent challenges, BUSD has fallen further behind stablecoin rivals in what has become a tough battle. According to data from DefiLlama, which measures the performance of digital assets, BUSD lost 11.3% of its market value in a month, while USDT gained 1.3% and USDC fell 1.9%. Nonetheless, BUSD is the only one of the top three stablecoins to have increased in market value during the last year.
According to a survey by research firm CryptoCompare, the global market capitalization of stablecoins declined for the tenth straight month in January, to $137 billion. According to CryptoCompare, stablecoin dominance in the overall cryptocurrency market has declined to 12.4% from an all-time high of 16.5% in December, indicating that traders have been shifting away from stablecoins and toward riskier assets.
