Rising regulatory scrutiny of Paxos and Binance is reportedly the cause of the lost market cap.is the world’s third largest stablecoin by market capitalization. However, that market cap has shrunk considerably over the past few weeks. BUSD began the year with a market capitalization of $16.5 billion. Until press time, the figure had dropped more than 40% to $9.6 billion, the lowest it’s been in two years.
The controversies surrounding BUSD prompted American crypto exchange Coinbase to suspend the stablecoin’s trading on its platform starting 13 March 2023. The decision was announced earlier this week, where the exchange cited BUSD’s inability to meet their listing standards. In a recent interview with Bloomberg TV, Coinbase CEO Brian Armstrong explained that the liquidity concerns with BUSD prompted the decision to halt its trading. He said:
“The reason we did that was that Paxos, the issuer of BUSD, had been ordered to stop minting it, so we were concerned about liquidity issues for our customers.” Armstrong was referring to the order issued by the New York Department of Financial Services. Notably, the order directed Paxos to stop minting Binance USD. This order came just a few days after the Securities and Exchange Commission issued a Wells notice to the stablecoin issuer, informing it of potential enforcement action coming its way.Binance CEO Changpeng Zhao addressed the declining market capitalization of BUSD on 17 February.