• Binance-branded BUSD stablecoin has lost $1 billion in market cap and dropped to fourth place among stablecoins.
• The New York Department of Financial Services (DFS) ordered Paxos, the crypto firm that issues BUSD, to stop minting tokens.
• Additionally, the SEC has issued a Wells Notice to Paxos and launched lawsuits against Binance and its CEO Changpeng Zhao.
Binance Coin Loses $1 Billion in Market Cap
Binance USD (BUSD) stablecoin has seen its market cap drop from $5.5 billion a month ago to around $4.3 billion today, according to data by CoinMarketCap. This places BUSD in fourth position among stablecoins just behind decentralized DAI stablecoin which climbed up to more than $4.6 billion over the past couple of days. Tether’s USDT and USDC Coin (USDC) are still at the top with each having a market cap of around $83 billion and $28 billion respectively.
Regulatory Clampdown Affects BUSD
The decline in market cap for BUSD comes after the New York Department of Financial Services (DFS) issued an order for Paxos, who issues the token, not to mint any new tokens as it had “several unresolved issues related” with its relationship with Binance. It was later revealed that the SEC had issued a Wells Notice to Paxos and planned on suing them over their issuance of unregistered security called BUSD token without due authorization from regulators. This led Paxos to announce that it would end all ties with Binance but continue supporting and redeeming tokens until February 2024 at least.
SEC Launches Lawsuits Against Binance
The SEC then proceeded to launch lawsuits against both Binance and company CEO Changpeng Zhao accusing them of operating an illegal securities exchange by offering unregistered securities like their own token “BNB” along with their own version of a stablecoin “BUSD” without proper authorization from regulators .
Tether Briefly Loses Peg Amid Sell-off Intensifies
Last week saw USDT lose its dollar peg as two major pools for trading in this asset became heavily imbalanced allowing traders to swap tens of millions worth of these coins for others like USDC or DAI causing large amounts of sell pressure on it leading it away from its peg briefly before recovering back again shortly after this incident took place showing how volatile these digital assets can be when left unchecked .
The regulatory clampdown on both Tether’s USDT coin as well as on the entirely regulated PAXOS-backed ”BUSD” shows just how interconnected some aspects within this industry are . Despite being two completely different entities they still manage have some overlap in terms of regulation which could lead to more cautionary measures taken by firms who issue such assets in future so that they remain compliant with all regulations set forth by respective authorities .