Paxos released a statement at 6 AM ET Monday that BUSD had 16.16 billion tokens. By the close of the eight-hour period, the total number of tokens in circulation has risen to 15.87 billion.
Increased Redemption Activity for BUSD Stablecoin During Regulatory Examination
The third largest stablecoin by market capitalization, BUSD, is seeing a lot of action Monday. This is because in just eight hours, 286,720,000,000 BUSD have been redeemed. This exercise spike was earlier than anticipated. It was previously reported that the US Securities and Exchange Commission (SEC) had sent a Wells Notice to Paxos, and that the New York Department Of Financial Services (NYDFS) was investigating the firm.
The next day, Paxos issued a press release informing the public that it was cooperating with the NYDFS and would stop minting BUSD tokens. However, they added that “existing BUSD tokens will remain fully backed and redeemable through the Paxos Trust Company at least until February 2024.” Along with the Paxos release, the New York regulator issued a Consumer Advisory about Binance USD (BUSD), which is issued by Paxos.
Trades have been active since Monday, with nearly $290 million being traded. This is in addition to the billions that were traded during the past months. BUSD’s market capitalization was estimated to be around $23.24 Billion in the past few months. In addition, more than 30% of its supply had been redeemed in the last 90 days. After the announcement Monday, BUSD dropped to $0.992245 due to slight price fluctuations February 13.
Most of BUSD’s trading is currently being paired with Tether USDT, followed by the Turkish Lira, Makerdao DAI, and the US Dollar according to CryptoCompare.com stats Monday. Prior to the Paxos press release Monday morning, BUSD trading volume was approximately $15 billion. It has since increased by 18%, or more, to $17.60 billion as of 3:15 PM. Aside from the multiple redemption options, Binance CEO Changpeng Zhao (CZ) warns of serious consequences for the crypto space if BUSD is declared a security.
What impact will the current regulatory scrutiny and trades have on the future of BUSD, and other stablecoins? Let us know what you think in the comments section below.
