DAI stablecoin, with a circulation of around $4.6 billion, has surpassed BUSD amidst mounting legal troubles for the world’s largest crypto exchange, Binance.
The market capitalization of BUSD has declined to $4.3 billion following the regulatory drama that started earlier this year.
- According to data from CoinMarketcap, BUSD circulation is down over 70% since the beginning of the year. During the same period, the circulation of DAI has also retraced but by only 20%.
- BUSD was launched in 2019 under the umbrella of Binance’s ‘Project Venus.’ Although the crypto exchange does not issue the stablecoin, it has been on a downward spiral for several months now.
- The first major blow to BUSD’s trajectory was Paxos’ move to stop minting the stablecoin at the end of February at the direction of the US New York Department of Financial Services (NYDFS).
- In March, the Commodities Futures Trading Commission (CFTC) filed suit against the exchange for improper licensure and offering US consumers the wrong financial products.
- The subsequent lawsuit by the SEC against Binance forced the crypto exchange to delist eight BUSD trading pairs from its margin trading platform.
- While BUSD has shown impressive resilience in the face of turbulence as it managed to maintain its position among the top three most dominant stablecoins for several months, however, the recent surge in burn rate finally pushed its supply below that of DAI.
- Zooming out, the persistent regulatory attacks on the industry have translated into a decline in the whole stablecoin market, which can be viewed as a sign of capital draining from the digital asset space and a troubling trend.
- This week’s deviation of USDT from the $1 peg further fueled FUD narratives, but Tether’s CTO reassured users that the company is ready to redeem any amount.