Within days, Binance’s BUSD stablecoin lost more than $2 billion in market capitalization to its competitor, Tether’s USDT.
A few days before the end of the issuance of the BUSD stablecoin from Binance, investors are migrating to other horizons.
The capitalization of BUSD, which remains the third-largest stablecoin in the market, is in freefall, falling from $16.1 billion on Monday to $13.5 billion on Friday. Conversely, the market capitalization of stablecoin king Tether USDT gained $2 billion, rising from $67.8 billion to over $70 billion. Although the USDT confirms its leading position, many doubts persist about this stablecoin and especially about the company’s reserves.
The boss of the giant Binance, Changpeng Zao (CZ) who has been boosting the BUSD stablecoin in recent months, said on Friday that the “landscape is shifting”.
As a reminder, on Monday, the New York Department of Financial Services (NYDFS) ordered Paxos to stop issuing BUSD “following several unresolved issues related to Paxos’ oversight of its relationship with Binance.” . This ban will take effect next Tuesday, explaining recent investor movements that are expected to continue over the next few days.
As a reminder, three stablecoins backed by the US dollar dominate the market: theUSDT de Tether, Circle’s USDC and finally Binance’s BUSD. However, the end of this stablecoin could change the current market. Indeed, investors could be interested in stablecoins backed by currencies other than the US dollar, such as the euro for example.
Moreover, for the boss of Binance, algorithmic stablecoins (one of the most infamous of which is Terra’s UST which collapsed in mid-May) could make a comeback. As a reminder, a “classic” stablecoin (or stable cryptocurrency) is a cryptoasset (or digital asset) that is pegged to a fiduciary currency such as the euro or the dollar. A stablecoin can also be backed by other assets (such as gold).