BUSD, a stablecoin, currently has a market cap at $4.30 billion, down 29% from $5.54 billion on May 18. Since December of last year, this stablecoin has been trending declined, as the market capitalization reached $23 billion.
The drop in BUSD’s market capitalization is related to the developments surrounding Binance following the severe crash of FTX in November 2022. In December of last year, Binance was targeted by the US Department of Justice, leading to to a net withdrawal of $3.6 billion within seven days. The exchange has seen a massive buyback of BUSD from market makers, including a buyback worth over $245 million from Jump Finance.
Binance and Paxos Trust teamed up to create the BUSD stablecoin in September 2019. Paxos issues and owns the product, while Binance licenses the brand. For Paxos, this partnership presents new challenges. In February, the company reportedly received a Wells Notice from the US Securities and Exchange Commission, alleging that Binance USD was an unregistered security.
The investigation led the New York Financial Services Authority (NYDFS) to order Paxos to stop issuing BUSD. These events caused a significant loss of market share for BUSD, from $15.88 billion on February 12 to $8.38 billion on March 13.
The latest lawsuit from the SEC against Binance on June 5 is also a blow, accusing the exchange of offering unregistered securities. The US regulator has accused Binance of violating 13 things, including the sale of unregistered BNB and BUSD tokens.
Tether’s USDT is garnering interest while markets. The stablecoin reached a dominance rate at 65.89% in May, up from 47.04% year-on-year. USDT’s market capitalization has grown to $83.1 billion, while USDC’s market capitalization has dropped from a peak of $55 billion to $29 billion.