It has been a rough ride for Binance-owned stablecoin BUSD since Paxos received a Wells notice from the SEC.
In a company email last week, Paxos noted that since its decision to halt minting the cryptocurrency, more than $2.8 billion in BUSD redemptions had been made with no significant disruptions to the market.
While Paxos acknowledged redeeming billions in its company email, it’s unclear whether an equivalent amount of cash has been exchanged for the amount burned since. Blockworks has reached out for comment.
Now, as of 11:00 am ET on Friday, about $4.892 billion BUSD has been burned since the notice was issued, averaging $407.7 million daily, per blockchain data reviewed by Blockworks.
The stablecoin’s dollar peg has also been wavering on certain markets, hitting $0.99 earlier this week, according to CoinGecko.
BUSD’s circulating supply has shrunk by 26% following the SEC probe. There is roughly $11.4 billion BUSD circulating in the market today, almost half the size of its total circulating supply at its peak last November.
Despite the sharp drop in market capitalization, BUSD still remains the third largest stablecoin, following Tether’s USDT which has a market cap of $70 billion and Circle’s USDC which has a market cap of $42 billion.
Paxos has, too, noted that it would continue to support BUSD until at least February next year “and maintain the highest standards of security and soundness in the stablecoin market.”
“We remain fully focused on serving the end holders of BUSD and protecting them from undo harm,” the company said in the email to its staff.
Zhong Yang Chan, head of research at CoinGecko, told Blockworks that in the longer term, the events conspiring at Binance could motivate the industry to continue innovating toward decentralized stablecoins.
“There have already been efforts in this direction post-UST collapse and the censorship of Tornado Cash, and we have seen renewed interest in this sector as new stablecoins such as Aave’s GHO and Curve’s crvUSD prepare to launch in the market,” he said.
Updated Feb. 24, 2022 at 11:28 am ET: Added context.
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Source: https://blockworks.co/news/sec-triggers-bank-run-on-busd