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Drawing from recent data, Binance's dollar-tied stablecoin, Binance USD (BUSD), is grappling with a precipitous fall in market value. Positioned fourth among other stablecoins in terms of market capitalization, it has experienced a billion-dollar decrease in just one month.
Current data reveals a downturn for BUSD, with its market cap hovering around $4.3 billion, marking a drop of 30% from its previous value of $5.54 billion. Since reaching its peak at a staggering $23 billion in December 2022, BUSD's trajectory has been predominantly downward.
BUSD's downward spiral coincides with significant developments within Binance, especially following the unexpected downfall of FTX in November 2022. In December, speculation swirled around the potential targeting of Binance by the U.S. Department of Justice, leading to a rapid withdrawal of $3.6 billion over a week. Notably, this involved heavy BUSD redemption from market makers, including Jump Finance, which accounted for over $245 million.
BUSD was created through a collaborative effort between Binance and Paxos Trust in September 2019. While Paxos is the issuer and owner, Binance lends its brand. However, the partnership also brought along regulatory headaches for Paxos. Earlier this year, the U.S. Securities and Exchange Commission served a Wells notice to Paxos, suggesting that BUSD might be an unregistered security.
The subsequent scrutiny from the New York Department of Financial Services forced Paxos to halt the issuance of BUSD. These events led to a significant decline in the market share of BUSD, plummeting from $15.88 billion in February to $8.39 billion in March.
Adding to the list of challenges, Binance found itself on the receiving end of a lawsuit from the SEC on June 5, alleging the offering of unregistered securities. The regulator slapped the exchange with 13 charges related to the BNB and BUSD tokens.
Meanwhile, the landscape of US dollar-pegged stablecoins has seen a reshuffling. Tether has made a comeback to its previous peak, despite the general decline in most stablecoin market caps. However, Circle's USD Coin and Dai have witnessed a decrease in their market shares.
In contrast, USDT's market dominance has risen to 65.90% from 47.03% just a year ago, reaching a market capitalization of $83.1 billion. In comparison, the market cap of USDC has fallen from its peak of $55 billion to $29 billion.
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