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The BUSD’s market cap is decreasing

The market capitalization of $BUSD has fallen below 9 billion USD for the first time in almost two years, due to the US regulatory crackdown on $BUSD token issuers and its planned delisting from major crypto exchanges. This decline is another negative development for $BUSD, which has been experiencing a sharp drop from its historical peak of 23.49 billion USD since November 2021.

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$BUSD reached its all-time high shortly after the fall of the FTX cryptocurrency exchange. Since then, it has declined and is now at levels last seen in March 2021. This is likely due to the potential lawsuit from the US Securities and Exchange Commission (SEC) against Paxos, the company that issues $BUSD, and the order from the New York State Department of Financial Services for Paxos to stop minting and issuing $BUSD.

Coinbase announced the delisting of the stablecoin will take place on March 13, 2023. Binance CEO Changpeng Zhao also announced the gradual delisting of $BUSD from his exchange if the situation does not change.

As of 7 March 2023, the market capitalization of $BUSD is 8,421,338,305 USD.

Despite the confirmation from Paxos, which issues $BUSD, that it has 100 % fiat-backed reserves held in aggregated accounts at US bank insurers or in US Treasury bills, the stablecoin's market capitalization continues to decline.

Impact

The market is unlikely to be greatly affected by this. If everything is indeed secured, every token issued by Paxos will be redeemed. Furthermore, since $BUSD is still firmly holding its peg to 1 USD, transitioning to another stablecoin should be smooth and without financial losses.

I don't really understand the SEC's lawsuit against Paxos over the $BUSD stablecoin. The SEC has been targeting crypto projects over their tokens, spurred on by suspicions that they are unregistered securities. However, in my opinion, this is not possible with a stablecoin that holds a value of 1 USD, and which does not fluctuate in price. Therefore, it cannot be considered a security. We'll see how the court ruling goes and whether $BUSD survives. I personally preferred this stablecoin over others, so I hope the court rules in favor of Paxos and that the SEC's crackdown on crypto companies calms down a bit.