According to data from CoinMarketCap, BUSD, the stablecoin created through a partnership between Binance and Paxos Trust, has experienced a significant decline in market capitalization over the past 30 days, causing it to drop to the fourth position among stablecoins.
Currently, the market cap of BUSD stands at $4.3 billion, marking a 29% decrease from $5.54 billion recorded on May 18. This downward trend for BUSD began in December 2022 when its market cap reached an impressive $23 billion.
The decline in BUSD’s market cap appears to be closely tied to the major developments surrounding Binance, which followed the dramatic collapse of FTX in November 2022.
In December 2022, news emerged suggesting that the U.S. Department of Justice would focus its attention on Binance, triggering a massive net withdrawal of $3.6 billion in just seven days. Market makers, including Jump Finance, redeemed substantial amounts of BUSD, with withdrawals exceeding $245 million.
It is worth noting that the creation of BUSD resulted from a partnership between Binance and Paxos Trust, with Paxos being the issuer and owner of the stablecoin while Binance licenses its brand.
However, this partnership has presented new challenges for Paxos. In February, reports surfaced claiming that the U.S. Securities and Exchange Commission had issued a Wells notice to Paxos, alleging that BUSD was an unregistered security.
The fall in market capitalization and subsequent decline in BUSD’s position among stablecoins highlight the challenges faced by the cryptocurrency industry as it navigates regulatory scrutiny and market volatility.
It remains to be seen how BUSD and other stablecoins will respond to these challenges and adapt to the evolving landscape of the digital asset market.
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