Binance’s BUSD stablecoin loses $1 billion in market cap, drops to fourth place.

The Binance-branded stablecoin known as BUSD has experienced a decrease in market cap by $1 billion, dropping to the fourth position among stablecoins.

According to CoinMarketCap, the Binance USD (BUSD) stablecoin currently has a market cap of approximately $4.3 billion, which is down from $5.5 billion just a month ago.

This places BUSD in fourth position among stablecoins, coming in right behind the decentralized stablecoin DAI, which has seen its market cap rise to more than $4.6 billion over the past couple of days.

The two largest stablecoins in the market are Tether’s USDT and USDC Coin (USDC), each with a market cap of around $83 billion and $28 billion, respectively.

The continued decline in BUSD’s market cap follows the New York Department of Financial Services (DFS) ordering Paxos, a crypto firm that issues the stablecoin, to stop minting BUSD tokens due to “several unresolved issues related to Paxos’ oversight of its relationship with Binance,” according to a consumer alert from the DFS.

It was later revealed that the SEC had issued a Wells Notice to Paxos and plans to sue the company over its BUSD issuance, arguing that BUSD is considered an unregistered security.

As a result of the regulatory clampdown, Paxos announced it would “end its relationship with Binance” and would stop issuing new BUSD tokens from February 21. However, the company will continue to support and redeem the tokens until at least February 2024.

In another setback for the Binance-branded stablecoin, the SEC has launched lawsuits against Binance and CEO Changpeng Zhao, accusing the firm of illegally operating a securities exchange.

The agency accused Binance of breaking the law by offering unregistered securities to the general public, including its Binance Coin (BNB) token and BUSD stablecoin.

Tether Briefly Loses Peg As Sell-off Intensifies

Last week, USDT lost its dollar peg after two major pools for stablecoin trading became heavily imbalanced.

At the time, USDT balances on Curve’s popular 3pool, a stablecoin swapping pool comprised of USDT, USDC, and DAI, rose to over 70%, suggesting traders had swapped tens of millions of USDT for USDC and DAI.

The selling pressure on USDT came days after the largest stablecoin in the market saw its market capitalization hit a new record high, exceeding $83.2 billion.

The stablecoin managed to recover the $20 billion in market value it had lost following the collapse of rival stablecoin TerraUSD last year.

While Tether has managed to recover the market value it lost last year, other stablecoins have not been as successful.

For instance, USDC, the second-largest stablecoin, currently has a market cap of around $29 billion, far less than its all-time high record of over $56 billion, according to data by CoinGecko.

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