BUSD Suffers Capitalization Blow as Users Migrate to USDT

Binance USD (BUSD) stablecoin is facing a decrease in market capitalization as more users migrate to Tether’s USDT. This came as the New York Department of Financial Services ordered Paxos Trust Co., the issuer of BUSD, to stop creating more of Binance’s dollar-pegged stablecoin. Binance’s CEO, Changpeng “CZ” Zhao, tweeted that users are already migrating to other stablecoins, and Binance will adjust its product offering accordingly.

#BUSD. A thread. 1/8

In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!

— CZ 🔶 BNB (@cz_binance) February 13, 2023

However, the firm will still support BUSD in the meantime. This uncertainty in BUSD’s future has led to a fall in BUSD’s market cap, while USDT’s market cap has risen to $68.58 billion on February 13th. Moreover, data indicate that USDT accounted for almost 14% of 3pool’s TVL in Curve, with a TVL of $537 million. This points to the fact that more users are converting their stablecoins to USDT.

USDT Stablecoin Market Dominance Nearing 50%

The recovery in the crypto market in January was supported by increased USDT transactions, helping to recover the USDT market cap. Paolo Ardoino, Tether’s CTO, recently took to Twitter to announce that USDT’s stablecoin market share is nearing 50%, which is the first time in the last 14 months. Tether also reported a $700 million profit in the fourth quarter, significantly reducing its secured loans and eliminating its commercial paper exposure.

As Binance moves away from using BUSD as the primary trading pair, it remains to be seen how it will adjust its products to cope with the decline in BUSD’s market capitalization. This shift in demand towards USDT could have implications for Binance’s market position as users flock to the leading stablecoin. Meanwhile, Binance is continuing to support BUSD for the time being, but the future of the stablecoin remains uncertain in light of the regulatory actions against Paxos Trust Co.