Binance-backed BUSD has seen its supply shrink by around $5 billion as regulators ramp up their scrutiny of the stablecoin.
Binance USD’s (BUSD) supply shrank by 18.2% — roughly $2.27 billion — over the last seven days to $10.84 billion, according to CryptoSlate’s data.
The massive redemptions have seen the stablecoin drop out of the top 10 cryptocurrencies by market cap, according to CoinGecko.
During this period, Binance burnt $2 billion idle BUSD on the BNB Chain on Feb. 22 — releasing the BUSD collateral on the Ethereum (ETH) chain.
Since BUSD issuer Paxos was ordered to stop other mints of the stablecoin on Feb. 13 by the New York Department of Financial Services (NYDFS), BUSD has seen its supply tank by around $5 billion.
Following the news, blockchain analytical firm Santiment reported that BUSD whales were rapidly dumping the tokens.
The stablecoin also briefly traded at a discount against USDT on Feb. 23, according to Kaiko data. Besides that, BUSD reportedly dropped to a low of $0.20 against the DAI stablecoin on Feb. 22 as liquidity for the stablecoin fell.
Stablecoins rival profit
Meanwhile, BUSD’s market cap decline has profited rival stablecoins like Circle’s USD Coin, Tether’s USDT, and TrueUSD (TUSD) — which all recorded gains in the last seven days.
USDC’s market cap increased by $827 million, while TUSD rose by $131 million and USDT by $466 million, according to CryptoSlate data.
Binance CEO Changpeng Zhao (CZ) noted that the stablecoin “landscape is shifting.” USDT was the major winner because its market cap was rising, according to CZ. USDT dominance rose to its highest level since May 2022 following the events.
However, the little-known TUSD stablecoin has also recently begun to see adoption. Dormant TUSD coins were moving to exchanges, and its crypto exchanges supply reached 73% for the first time since June 2021, Santiment said.