Paxos’ press release, which was published at 6 a.m. Eastern time on Monday, has led to a significant drop in the number of BUSD tokens in circulation. Prior to the release, there were approximately 16.16 billion BUSD tokens in circulation. However, in just 8 hours, nearly $290 million worth of BUSD tokens were redeemed, bringing the current number of BUSD tokens in circulation to 15.87 billion.”
BUSD, the third largest stablecoin by market capitalization, is witnessing a surge in activity on Monday, with 286,720,127 BUSD tokens redeemed in just eight hours. This spike in activity follows reports that the U.S. Securities and Exchange Commission (SEC) had sent Paxos a Wells Notice over potential charges and that the New York Department of Financial Services (NYDFS) is investigating the company. The increased activity began the previous day.
In response to the investigation by the New York Department of Financial Services (NYDFS), Paxos published a press release the following day, announcing their cooperation with the regulator. As part of this cooperation, Paxos stated that they would stop minting BUSD, but reassured customers that “existing BUSD tokens will remain fully backed and redeemable through Paxos Trust Company until at least February 2024.” The NYDFS also issued a Consumer Notice regarding the Binance USD (BUSD) stablecoin issued by Paxos.
The redemption of BUSD tokens has picked up the pace, with nearly $290 million redeemed on Monday alone, adding to the billions already redeemed in recent months. Just three months ago, BUSD had a market capitalization of $23.24 billion, however, over 30% of its supply has been redeemed in the past 90 days. The increased redemptions caused some fluctuations in price, leading BUSD to drop to a low of $0.992245 on February 13th.
BUSD’s trading activity today is largely paired with Tether (USDT), with the Turkish lira, Makerdao’s DAI, and the U.S. dollar following closely, according to data from CryptoCompare.com on Monday. Prior to Paxos’ press release on Monday morning, BUSD’s trading volume was around $15 billion, however, it has since experienced an 18% increase to reach $17.60 billion by 3:15 p.m. Eastern time. Despite a large number of redemptions, Binance CEO Changpeng Zhao (CZ) has warned of potentially significant impacts on the cryptocurrency sector if BUSD is classified as a security.
Johnson Philip is a passionate cryptocurrency enthusiast and writer for CoinSEM.com. He has been following the crypto industry for years, and has a deep understanding of the various technologies and trends driving the market. Johnson has written extensively on topics ranging from blockchain development to ICO analysis and is known for his ability to translate complex technical concepts into easy-to-understand language.