Coinbase, the world’s second-largest cryptocurrency exchange by trading volume, announced on February 27 that it will suspend trading for Binance USD (BUSD) from March 13, 2023. The suspension is due to the exchange’s “listing standards” and follows reports that the US Securities and Exchange Commission (SEC) is planning to sue its issuer, Paxos Trust, for selling BUSD as an unregistered security.[0]
The announcement comes just two weeks after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD), to stop minting BUSD tokens.[1] In a consumer alert, the DFS said it issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”[2]
Per the Twitter thread, this decision will affect Coinbase.com (basic and advanced), Coinbase Pro, Coinbase Exchange, and Coinbase Prime.[3] You will still be able to access and withdraw your BUSD funds at any time, the exchange stated.[4]
Data shows that BUSD’s market capitalization has met a steep downturn, going from its $23.49 billion all-time high on November 15, 2022, to below $10 billion.[5] However, the stablecoin has maintained its position as the third-largest stablecoin by market cap despite the recent regulatory scrutiny.[5]
The SEC’s impending lawsuit against Paxos Trust has caused a significant drop in BUSD’s circulating supply and market capitalization. As a result, Coinbase was forced to suspend trading for the BUSD stablecoin, indicating that the token no longer meets their listing standards.
The market for stablecoins has seen a drop in market capitalization, with blame being placed on Silvergate Bank controversy.[6] BUSD’s total balance held on exchanges has also fallen below 9 billion tokens as Tether (USDT) becomes the dominant stablecoin by accounting for 55% of the stablecoin market cap.
It is clear that the US regulatory actions, as well as the planned delisting from Coinbase, have had an impact on the market for BUSD.[7] The future of BUSD remains uncertain as the SEC’s investigation is still ongoing.
0. “5M USDC Burned At Treasury; 10.3M USDC Transferred To Coinbase By CoinEdition” Investing.com, 2 Mar. 2023, https://www.investing.com/news/cryptocurrency-news/5m-usdc-burned-at-treasury-103m-usdc-transferred-to-coinbase-3020723
1. “Binance USD Loses 43% Of Market Cap Value Following Regulation Issues” NewsBTC, 3 Mar. 2023, https://www.newsbtc.com/stablecoin/binance-usd-loses-43-of-market-cap-value-following-regulation-issues/
2. “Exchange Stablecoin Wars Hot Up – Coinbase to Suspend BUSD Trading on March” Cryptonews, 28 Feb. 2023, https://cryptonews.com/news/exchange-stablecoin-wars-hot-up-coinbase-to-suspend-busd-trading-on-march.htm
3. “Coinbase delisting BUSD as SEC stablecoin scrutiny mounts” CoinGeek, 28 Feb. 2023, https://coingeek.com/coinbase-delisting-busd-as-sec-stablecoin-scrutiny-mounts
4. “Latest Crypto News: Coinbase To Suspend Binance USD Stablecoin, Liquid Staking Overtakes DeFi Lending As 2nd Largest Crypto Sector” Outlook India, 28 Feb. 2023, https://www.outlookindia.com/business/latest-crypto-news-coinbase-to-suspend-binance-usd-stablecoin-liquid-staking-overtakes-defi-lending-as-2nd-largest-crypto-sector-news-266070
5. “Binance USD (BUSD) Market Cap Plummets, Here’s Why | Bitcoinist.com” Bitcoinist, 16 Feb. 2023, https://bitcoinist.com/busd-market-cap-plummets/
6. “Stablecoin market cap falls for eleventh consecutive month, and IMF calls for ‘coordinated action’ on crypto” City A.M., 23 Feb. 2023, https://www.cityam.com/stablecoin-market-cap-falls-for-eleventh-consecutive-month-and-imf-calls-for-coordinated-action-on-crypto
7. “Binance USD records less than $10 billion market cap over regulatory issues” msnNOW, 3 Mar. 2023, https://www.msn.com/en-in/money/markets/binance-usd-records-less-than-10-billion-market-cap-over-regulatory-issues/ar-AA18axHX