The cryptocurrency industry has been under a lot of regulatory pressure and scrutiny since the second half of 2022.
The regulatory authorities have become very aggressive against cryptocurrency firms. Many projects have been under great pressure from regulators, especially the regulators from the United States.
Binance USD Comes Under Pressure
Since the mid of February, Binance USD has come under a great level of scrutiny by the US regulators.
The US Securities and Exchange Commission has gone after the issuer of the BUSD token, Paxos. It has made claims that the particular platform offered the stablecoin without regulatory approval.
This has created a lot of uncertainty in the cryptocurrency market. The investors are no longer trusting the BUSD and they have started to withdraw their funds or exchange them with other assets.
This is the reason why the overall valuation of the stablecoin has been falling significantly in the trading market.
According to the latest market data, the market capitalization of Binance has fallen significantly. It is an alarming situation that BUSD’s overall valuation is now lower than $10 billion.
This is for the first time in a couple of years that the market valuation of the stablecoin has fallen below this level.
By now, everyone knows in the cryptocurrency industry that it is the US regulators that have caused troubles for the issuer of the Binance USD token.
It has banned the company from issuing and releasing any more BUSD tokens. This means that the supply and circulation of the stablecoins are no longer unlimited and high up to the level that was communicated initially.
The platform is now facing scrutiny from the regulator and many exchanges are concerned about the latest developments involving BUSD.
Some of the major cryptocurrency exchanges have announced the delisting of the stablecoin from their platform. Cryptocurrency exchanges such as Coinbase have already announced the delisting of the stablecoin from their platform.
Market Valuation of BUSD
The market capitalization of BUSD has been moving in a downward trajectory ever since the regulators have gone after the issuer of the token.
It was back on November 15, when the market capitalization of BUSD had reached an all-time high. At that time, the market valuation of the stablecoin had reached to a high of $23.49 billion.
Since that time, the valuation of the token has only steered in the negative direction. It was around the same time that the FTX exchange had crashed and was in the process of filing for bankruptcy.
The data shows that the market capitalization of BUSD has steered downwards in recent periods. As of March 3, the market valuation of BUSD has steered below the $10 billion mark.
At the time of writing, the market capitalization of BUSD is at $9.66 billion. This is the lowest market capitalization level BUSD has hit since June 29, 2021.
Paxos is Facing a Lawsuit
It was on February 12, when the US Securities and Exchange Commission filed a lawsuit against Paxos.
The US SEC alleged that Paxos was possibly in violation of investor protection laws. Ever since the regulator filed the lawsuit against Paxos, the valuation of the BUSD token has continued declining.
The report shows that the valuation of the stablecoin has dipped by $6.65 billion ever since the lawsuit was filed against Paxos.
In addition to filing the lawsuit, the regulator has even gotten the order passed that prohibits the company from minting and issuing the stablecoin.
Due to the recent developments, investors have shown less interest in the stablecoin. With no bright future in sight for the stablecoin, the investors have moved on to different stablecoins.
Coinbase also delisted the token from the platform claiming that the token no longer met the standards and policies that they had for listing the tokens.
Coinbase is now supporting USD Coin (USDC), which is the second largest stablecoin in the market.