BUSD drops to fourth place among stablecoins.

The Binance USD (BUSD) stablecoin, which is pegged to the dollar, has dropped over $1 billion in market capitalization over the past 30 days, according to data from CoinMarketCap. It now sits at fourth place among other stablecoins, with a market cap of $4.30 billion, down 29% from $5.54 billion on May 18. The stablecoin has been in a downward trend since December 2021, when its market cap hit a high of $23 billion.

The decline in BUSD market cap coincides with major developments surrounding Binance following the dramatic collapse of FTX in November 2022. In December, a report indicating that the U.S. Department of Justice was targeting Binance led to net withdrawals of $3.6 billion within seven days. The exchange saw large BUSD redemptions from market makers, including more than $245 million from Jump Finance.

Binance partnered with Paxos Trust to create the BUSD stablecoin in September 2019. Paxos issues 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 U.S. Securities and Exchange Commission alleging that Binance USD was an unregistered security.

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The investigation led the New York Department of Financial Services (NYDFS) to order Paxos to stop the issuance of BUSD. Together, these episodes took a significant bite out of BUSD’s market share, from $15.88 billion on February 12 to $8.38 billion on March 13. The most recent blow came from the SEC lawsuit against Binance on June 5 for allegedly offering unregistered securities. The U.S. regulator pressed 13 charges against the exchange, including unregistered offers and sales of the BNB and BUSD tokens.

The market dominance of stablecoins pegged to the U.S. dollar has undergone some changes over the past year, with Tether (USDT) climbing back to its all-time high, while most stablecoins are declining. Circle’s USD Coin (USDC) saw its market share decline from 34.88% in May 2022 to 23.05% in May 2023. Market participation of BUSD plunged from 11.68% to 4.18% in the same period, while Dai’s (DAI) share of the crypto market was at 3.66%, down from 4.05% in May 2022.

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

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