The former crypto giant, Binance USD, has received an unexpected setback this week as the crypto exchange Coinbase announced the delisting of the Paxos-issued stablecoin.
Causing a ripple effect, this announcement has seen BUSD’s market capitalization drop below $10 billion for the first time since June 2021, data from CoinGecko shows.
Demand for the stablecoin has been rapidly declining since Paxos announced it would stop minting new BUSD tokens in February. This decision was reached due to orders from state regulator New York Department of Financial Services (NYDFS), as well as pressure from the U.S. Securities and Exchange Commission (SEC).
To compound the issue, blockchain data from Nansen reveals that investors have redeemed some $6.7 billion of BUSD from Paxos since Feb. 13.
Dogecoin (DOGE) was the winner in this situation, bumping BUSD from ninth place on the cryptocurrency by market capitalization list and replacing it, according to CoinMarketCap.
Coinbase’s Chief Executive, Brian Armstrong, cited liquidity concerns for delisting BUSD. According to data from Kaiko, the platform’s daily trading volume for BUSD in the last two months was only about $9 million, and its market depth within 2% of the market price was just $600,000.
The main market for BUSD, Binance, has also seen a sharp decline in liquidity. Kaiko data indicates that the market depth within 2% for the stablecoin’s USDT and DAI pairs has fallen to $123 million from $200 million in February.
Clara Medalie, director of research at Kaiko, commented, “The overall liquidity is very thin, which is not great for a stablecoin that should theoretically always trade 1:1” with the U.S. dollar.
- BUSD's market cap has dropped below $10 billion for the first time since June 2021.
- Paxos announced in Feb. 2021 that it would stop minting new BUSD tokens.
- Coinbase announced delisting of BUSD citing liquidity concerns.
- Dogecoin replaced BUSD as the ninth-largest cryptocurrency by market capitalization, according to CoinMarketCap.
- BUSD's daily trading volume was only about $9 million in the last two months.
BUSD's luck has run out as its market capitalization has dropped below $10 billion, following Paxos' decision to stop minting new stablecoins and Coinbase's delisting due to liquidity fears. Dogecoin has replaced BUSD as the ninth-largest cryptocurrency in the world, and the platform's daily trading volume has been dwindling for the past two months.