BUSD moves to 4th place among stablecoins

The dollar-pegged Binance USD (BUSD) stablecoin now sits at the fourth spot by market capitalization, according to data from CoinMarketCap, after losing more than $1 billion over the past 30 days. shows,

At the time of writing, the BUSD market cap was $4.30 billion, down 29% from $5.54 billion on May 18. The stablecoin has been in a downtrend since December last year, when its market cap was above $23 billion.

The drop in BUSD market cap parallels major developments surrounding Binance following the dramatic collapse of FTX in November 2022. Last December, a report by the US Department of Justice targeting Binance resulted in net withdrawals of $3.6 billion in seven days. The exchange witnessed massive business redemptions from market makers, including over $245 million from Jump Finance.

A partnership between Binance and the Paxos Trust created the BUSD stablecoin in September 2019. Paxos releases and owns the product, while Binance licenses its brand. For Paxos, the partnership brought new challenges. In February, the company was reportedly served a Wells notice from the US Securities and Exchange Commission alleging that Binance USD was an unregistered security.

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The investigation led to the New York Department of Financial Services (NYDFS) ordering Paxos to stop issuing BUSD. Together, these episodes significantly cut BUSD’s market share, from $15.88 billion on 12 February to $8.38 billion on 13 March.

The most recent blow came from the SEC lawsuit against Binance on June 5 for allegedly offering unregistered securities. The US regulator brought 13 charges against the exchange, including the unregistered offering and sale of BNB and BSD tokens.

There has been some change in the market dominance of USD-pegged stablecoins over the past year, with Tether (USDT) climbing back to its all-time high, while most stablecoins have been falling.

Circle’s USD Coin (USDC) market share is set to drop from 34.88% in May 2022 to 23.05% in May 2023. BUSD’s market share dropped from 11.68% to 4.18% over the same period, while Dai’s (DAI) crypto market share stood at 3.66%, down from 4.05% in May 2022.

On the other hand, Tether’s USDT is gaining traction. The market dominance of the stablecoin stood at 65.89% in May, up from 47.04% a year earlier. Its market capitalization has increased to $83.1 billion, while the market capitalization of USDC has fallen from a peak of $55 billion to $29 billion.

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