Stablecoin giant Tether saw its flagship token, USDT, grow by nearly $1 billion in the aftermath of a regulatory crackdown against one of its rivals, BUSD.
The token’s market cap started out at $68.47 billion on Tuesday, before rocketing upwards to roughly $69.23 billion at about 9:10 a.m. EST, according to data from CoinMarketCap.
Meanwhile, the Paxos-issued BUSD has experienced a nearly equivalent decline from $16.14 billion on Monday to $15.46 billion on Tuesday. Paxos, the company behind the token, confirmed that it would stop minting new units of the stablecoin beginning next week, following orders from the New York Department of Financial Services (NYDFS).
Stablecoins like BUSD and USDT are cryptocurrencies that are value pegged to the US dollar. Each is backed by multi-billion dollar reserves mostly comprised of cash and US T-bills, but come with the programmability and transferability of a crypto asset. Investors often trade against such tokens on CeFi and DeFi exchanges when buying other more volatile cryptos, making them a backbone of the crypto economy.
BUSD’s losses may show that those seeking stablecoin liquidity are fleeing to the longtime king, Tether, to escape future regulatory crackdowns in the US. Unlike Paxos and Circle – issuer of the second largest stablecoin, USDC – Tether is owned by the Hong Kong-based company, iFinex.
Data from DeFiLlama shows that Tether’s latest gains bring its stablecoin market dominance to 50.77%, with the entire market worth $136.93 billion.
USDC, however, may still gain from BUSD’s demise in the long run. Binance CEO Changpeng Zhao has confirmed that his exchange will have to pivot away from its use of BUSD when consolidating stablecoin liquidity, possibly making room for USDC to flourish again.
Back in September, Binance began converting most major stablecoins including USDC (but not USDT) into BUSD when deposited to the exchange. This meant that any USDC sent to Binance was effectively sucked away into BUSD’s market cap, which had a noticeable impact on each coin’s market dominance.
Paxos has also been sent a Wells notice by the SEC for allegedly issuing BUSD as an unregistered security. Circle’s Chief Strategy Officer, Dante Disparte, said on Tuesday that Circle is yet to receive a similar notice.
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Source: https://decrypt.co/121327/busd-usdt-tether-market-cap-1-billion
