Binance USD (BUSD) has fallen out of the top five stablecoins by market capitalization after its circulating supply dropped below 1 billion, the lowest since December 2020. The circulating supply of BUSD now stands at 927 million tokens, a dramatic 96% decrease from its peak supply of 23.45 billion. This drop has also significantly affected its trading volume, which was less than $50 million in the past 24 hours.
The troubles for the Binance-backed stablecoin began last year when the U.S. Securities and Exchange Commission (SEC) labeled it a security in its legal actions against the cryptocurrency exchange. In addition, the New York Department of Financial Services forced Paxos, the issuer of BUSD, to halt further mints of the asset. Both Binance and Paxos strongly rejected this SEC classification.
These events led to a rapid departure from the troubled stablecoin within the crypto community. Binance quickly began promoting several stablecoin alternatives, including TrueUSD (TUSD) and First Digital USD (FDUSD), to its users. On January 5, Binance announced that it had automatically converted eligible users’ balances in the BUSD token to FDUSD. It also stated that it no longer supports BUSD withdrawals and encouraged its users to manually swap these BUSD tokens for FDUSD tokens at a 1:1 conversion rate on Binance Convert.
Despite these changes, Binance and Paxos have pledged to support BUSD until its complete phase-out this year. With the decline of BUSD, the top five stablecoins market now includes new entrants like TUSD and FDUSD, both of which have been heavily promoted by Binance.
However, Tether’s USDT remains the dominant player in the space, controlling around 70% of the market with a market capitalization of more than $90 billion. It is closely followed by Circle’s USDC, which has a market cap of $24.56 billion. According to 21Shares researcher Tom Wan, for a stablecoin to effectively compete against these giants, it needs to be integrated into centralized exchanges, incorporated into DeFi platforms, and used in payment and remittance functions.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | negative |
| Relevance Score | 1 |
| People | Tom Wan |
| Companies | U.S. Securities and Exchange Commission, Binance, Paxos, New York Department of Financial Services, 21Shares |
| Currencies | Tether, TrueUSD, US Dollar, USDC |
| Securities | None |
