The supply of Binance USD (BUSD), the third largest stablecoin, has decreased significantly as crypto traders abandon the troubled asset.
According to recent reports, the supply of BUSD has shrunk by 60% since mid-February, causing its market capitalization to slump from over $16 billion to around $10 billion.
Additionally, its market share has declined to 7.3% from approximately 20% last year, while Tether’s (USDT) market share has increased to 52%.
The decrease in BUSD supply is attributed to the U.S. Securities and Exchange Commission (SEC)’s enforcement action against the issuer of the Binance stablecoin, Paxos, on February 13.
The federal regulator classified it as a security, resulting in the New York-regulated crypto firm ceasing to mint BUSD.
As investors pivot, the outflow may harm the financial performance of Binance, with BUSD being a significant part of the business. It is likely that a reduction in overall volumes will put some strain on the exchange’s revenue.
Coinbase has also announced that it will delist BUSD because the stablecoin no longer meets its listing standards. This move has been interpreted by industry observers as an indirect attack on Binance as U.S. regulators up the ante in their war on crypto.
However, Binance CEO Changpeng Zhao has said that BUSD was never “big business” for the exchange, and the exchange intends to support as many other stablecoins as possible.
Nevertheless, the drop in BUSD supply and market share may have an impact on Binance’s bottom line, and the Binance native coin, BNB, has dropped 4% over the past week.