Before Paxos published a press release at 6am ET Monday, the BUSD stablecoin had approximately 16.16 billion tokens in circulation. In the last eight hours, nearly $290 million has been redeemed, bringing the number of BUSD in circulation to 15.87 billion.
BUSD Stablecoin Sees Increased Redemption Activity During Regulatory Scrutiny
The BUSD stablecoin is seeing increased activity on Monday as the third largest stablecoin by market capitalization. 286,720,127 BUSD redeemed in about eight hours. The spike in activity began the day before, when reports claimed that the US Securities and Exchange Commission (SEC) had sent Paxos a Wells Notice of possible charges. Previous reports also claimed that the New York Department of Financial Services (NYDFS) was investigating Paxos.
The next day, Paxos published a Press release stating that it was cooperating with the New York Department of Financial Services (NYDFS) and would stop minting BUSD. The company added that “existing BUSD tokens will remain fully backed and redeemable through the Paxos Trust Company three through at least February 2024.” Along with the Paxos press release, the New York regulator issued a consumer notice regarding the binance usd (BUSD) stablecoin issued by Paxos.
Trades have begun, with nearly $290 million traded Monday, after billions traded in recent months. Three months ago, BUSD’s market capitalization was approximately $23.24 billion and more than 30% of its supply has been redeemed in the last 90 days. The bailouts on Monday caused some slight price fluctuations and BUSD fell to a low of $0.992245 on February 13.
Much of the BUSD trading today is paired with Tether (USDT), followed by the Turkish lira, the Makerdao DAI and the US dollar, according to statistics from cryptocompare.com on Monday. Prior to the Paxos press release on Monday morning, BUSD trading volume was around $15 billion, but it has since risen 18% to $17.60 billion as of 3:15 p.m. this. In addition to the large number of redemptions, Binance CEO Changpeng Zhao (CZ) warns of significant repercussions to the cryptocurrency sector if BUSD is considered a security.
What impact will the recent swaps and regulatory scrutiny have on the future of BUSD and other stablecoins in the market? Share your thoughts in the comments section below.
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