Binance, the world’s largest cryptocurrency exchange, has been in the news lately with negative developments. Recently, its stablecoin has seen a 45 percent drop in market cap of BUSD as more investors start pulling their funds from the platform. The sudden drop in BUSD’s value was a result of growing concerns over the exchange’s credibility and reliability. Here are the details…
Binance’s stablecoin loses third place
Binance’s third place ranking as the market’s largest stablecoin has changed. Stablecoin operator Paxos Trust announced on February 13 that it will stop the issuance of its Binance-branded stablecoin, BUSD. The move comes after more news that the SEC plans to sue Paxos for violating investor protection laws. cryptocoin.com As we have also reported, stablecoins are cryptocurrencies pegged to fiat currencies such as the dollar or the euro. It is one of the largest markets for cryptocurrencies, with a cumulative market cap of over $136 billion.
Here is Bitfinex's Tether (USDT) pic.twitter.com/xHQNx2IcLc
— Tuur Demeester (@TuurDemeester) March 5, 2023
Coinbase told its customers on Monday that it will also suspend trading in Binance USD later in the month. According to CoinGecko, the pressures and delisting events have signaled that investors have been fleeing BUSD since then. This led to the asset’s market falling from around $16 billion on February 13 to about $8.7 billion today. The drop marks a loss of 45 percent.
Binance is still the world’s largest cryptocurrency exchange
Despite this setback, Binance is still one of the largest exchanges in the world and has a substantial user base. But recent events have shaken investor confidence, causing a significant exit from the stock market as many are now looking for alternatives. While BUSD’s market cap has taken a hit, rival Tether has seen an increase in market cap since the beginning of BUSD’s decline. It shows that the drop in the market value of Binance’s stablecoin is not dependent on the performance of the industry.
The recent drop in BUSD’s market value is seen as an alarming sign for Binance and its users. Unfortunately, the exchange is coming under a lot of pressure from regulators as they are actively questioning the solvency of the trading platform after the explosion of the FTX cryptocurrency exchange, which caused huge losses for both institutional and individual investors.
Users are looking for alternatives
Just as they give up on BUSD, it seems that investors are turning to an alternative. TUSD’s market value rose 23 percent last month, rising from $947 billion to $1.1 billion today. It currently ranks fifth in the stablecoin market. Created by TrustToken in 2018, TUSD prioritized real-time audits, legal protections and transparency for token holders. The stablecoin provider has also partnered with Chainlink to implement the oracle provider’s proof-of-reserve technology.
