BUSD Slips to Fourth Place Among Stablecoins in Market Ranking

Binance USD (BUSD) Stablecoin Slides to Fourth Place in Market Cap Among Stablecoins

The Binance USD (BUSD) stablecoin, which is pegged to the United States dollar, has slipped to the fourth position in terms of market capitalization among other stablecoins. Over the past 30 days, BUSD has experienced a decline of over $1 billion, according to data from CoinMarketCap.

As of now, the market cap of BUSD stands at $4.3 billion, representing a 29% decrease from $5.54 billion on May 18. The stablecoin has been on a downward trajectory since December 2022 when its market cap reached a peak of $23 billion.

The decline in BUSD’s market cap can be attributed to significant developments surrounding Binance following the collapse of FTX in November 2022. In December 2022, a report suggesting that the U.S. Department of Justice would target Binance resulted in net withdrawals of $3.6 billion within seven days. Market makers withdrew substantial amounts of BUSD, including over $245 million from Jump Finance.

BUSD was created through a partnership between Binance and Paxos Trust in September 2019. While Paxos issues and owns the stablecoin, Binance licenses its brand. However, the partnership posed challenges for Paxos. In February, the company reportedly received a Wells notice from the U.S. Securities and Exchange Commission, alleging that BUSD was an unregistered security. The investigation led the New York Department of Financial Services to order Paxos to halt the issuance of BUSD. These events significantly impacted BUSD’s market share, causing it to drop from $15.88 billion on February 12 to $8.38 billion on March 13.

The most recent blow to BUSD came from the SEC’s lawsuit against Binance on June 5, accusing the exchange of offering unregistered securities. The regulatory action included charges against Binance related to the unregistered offers and sales of BNB and BUSD tokens.

The dominance of stablecoins pegged to the U.S. dollar has witnessed changes over the past year. Tether (USDT) has climbed back to its all-time high, despite declining market caps of most stablecoins. Circle’s USD Coin has seen its market share decrease from 34.88% in May 2022 to 23.05% in May 2023. BUSD’s market participation has plummeted from 11.68% to 4.18% during the same period, while Dai’s share dropped from 4.05% in May 2022 to 3.66%.

Meanwhile, USDT has been gaining traction, with its market dominance rising to 65.89% in May, up from 47.04% a year ago. The market capitalization of USDT has reached $83.1 billion, while USDC’s market cap has declined from its peak of $55 billion to $29 billion.

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