The Binance stablecoin (BUSD) posted a nearly 60% drop in its market capitalization, which could be a clear sign of investors’ loss of confidence in the asset following the regulatory scrutiny it has received in recent days alongside the leading cryptocurrency exchange.
Recent data shows that the market capitalization of BUSD went from an all-time high of $23.49 billion on Nov. 15, 2022, to $9.69 billion this March 3, according to CoinMarketCap.
However, Binance’s stablecoin still maintains its position as the third-largest stablecoin by market cap.
Market cap is the total value of a cryptocurrency and is often taken as a simple way to determine the size of an asset and assess the risk of investing in it. This is calculated by multiplying the total number of tokens in circulation by their market price.
Therefore, a drop in market capitalization can be a sign that investors are losing confidence in the cryptocurrency and its future prospects.
What about the BUSD?
The market capitalization of the BUSD began to decline last February 13, when its issuer Paxos announced a date to stop issuing the stable coin, shortly after the U.S. Securities and Exchange Commission (SEC) issued a notice of a planned enforcement action to the blockchain infrastructure platform.
A day later, the New York State Department of Financial Services (NYDFS) ordered Paxos to stop issuing the Binance stablecoin.
BUSD market cap dropped -$2.45B (from 16.1B to 13.7B as of now), and most of it has moved to USDT.
USDT marketcap + 2.37B (From 67.8B to 70.1B)
USDC also declined -739M (from 42.3B to 41.5B)
Landscape is shifting.
(Note: BUSD is NOT issued by Binance.) pic.twitter.com/kVrZUYjuOh
— CZ 🔶 Binance (@cz_binance) February 17, 2023
Recently, Coinbase announced that it would suspend trading of BUSD, effective March 13, because the token does not meet its “listing standards.”
Binance in U.S. Crosshairs
Binance has been under the investigative radar of U.S. regulators for possible regulatory non-compliance, violation of the Investor Protection Act, and violation of anti-money laundering rules.
Yesterday, Thursday, it emerged that three bipartisan U.S. senators asked the exchange for details about its money laundering controls, accusing it of being a “hotbed of illegal financial activity.”
According to the Wall Street Journal, the lawmakers sent a letter on March 1 to the exchange’s CEO, Changpeng “CZ” Zhao, demanding details of the company’s balance sheets since 2017, internal procedures, and any communications about Zhao’s alleged efforts to limit compliance.
In a recent interview with the same media outlet, Binance’s chief strategy officer, Patrick Hillmann, assured that the exchange is working with regulators to resolve these issues.
The executive also noted that recent investigations would likely result in Binance paying huge fines without mentioning a specific number.
All this led to the exit of a large number of investors from BUSD, who began to fear for the stability of the cryptocurrency.
This led to Binance’s stablecoin capitalization plummeting.
Follow us on our social networks and keep up with everything in the Metaverse!
Twitter Linkedin Facebook Telegram Instagram Google News
