Stablecoin Rankings Shift: BUSD Slips to Fourth Place

The dollar-pegged Binance USD (BUSD) falls to fourth position

The stablecoin BUSD, which is pegged to the US dollar, has slipped to the fourth position in market capitalization among other stablecoins. According to data from CoinMarketCap, BUSD’s market cap has experienced a decline of over $1 billion in the past 30 days.

As of writing, the current market cap of BUSD stands at $4.30 billion, marking a 29% decrease from $5.54 billion on May 18. This decline has been consistent since December of the previous year when BUSD’s market cap reached its peak at $23 billion.

The decline in BUSD’s market cap can be attributed to significant events surrounding Binance, the platform associated with the stablecoin. In November 2022, FTX’s collapse had repercussions on Binance, and a report suggesting that the U.S. Department of Justice would target Binance led to substantial net withdrawals of $3.6 billion within a week. Market makers also redeemed a substantial amount of BUSD, including more than $245 million from Jump Finance.

The Binance and Paxos Trust Partnership

The BUSD stablecoin was created through a partnership between Binance and Paxos Trust in September 2019. Paxos issues and owns the stablecoin, while Binance licenses its brand. However, this partnership has faced challenges. In February, Paxos reportedly received a Wells Notice from the U.S. Securities and Exchange Commission, accusing Binance USD of being an unregistered security.

As a result, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD, which further impacted its market share. The market cap of BUSD declined from $15.88 billion on February 12 to $8.38 billion on March 13.

The SEC Lawsuit and Changing Stablecoin Dominance

The most recent blow to BUSD came from the SEC lawsuit against Binance on June 5. The regulatory body filed 13 charges against the exchange, including unregistered offers and sales of BNB and BUSD tokens.

The market dominance of stablecoins pegged to the U.S. dollar has undergone changes in the past year. Tether (USDT) has reclaimed its all-time high market share, while other stablecoins have declined.

• Circle’s USD Coin (USDC) has seen its market share decrease from 34.88% in May 2022 to 23.05% in May 2023.
• BUSD’s market participation has plunged from 11.68% to 4.18% during the same period.
• Dai (DAI) holds a 3.66% share of the crypto market, down from 4.05% in May 2022.

In contrast, Tether’s (USDT) market dominance has increased, reaching 65.89% in May, up from 47.04% a year ago. USDT’s market capitalization has risen to $83.1 billion, while USDC’s market cap has dropped from its peak of $55 billion to $29 billion.