BUSD Redemptions Soar Near $290 Million in 8 Hours After NYDFS Consumer Alert – Altcoins Bitcoin News
Before Paxos published a press release at 6 a.m. Eastern time Monday, the stablecoin BUSD had approximately 16.16 billion tokens in circulation. In the past eight hours, nearly $290 million has been redeemed, bringing the number of BUSD in circulation to 15.87 billion.
Stablecoin BUSD Sees Increased Redemption Activity During Regulatory Scrutiny
The stablecoin BUSD is experiencing increased activity on Monday as the third largest stablecoin by market capitalization has seen 286,720,127 BUSD redeemed in approximately eight hours. The increased activity began the previous day, when reports claimed the U.S. Securities and Exchange Commission (SEC) had sent Paxos a Wells Notice regarding potential charges. Earlier reports also claimed the New York Department of Financial Services (NYDFS) was investigating Paxos.
The following day, Paxos published a press release stating that it was cooperating with the New York Department of Financial Services (NYDFS) and would cease minting BUSD. The company added that “existing BUSD tokens will remain fully-backed and redeemable through Paxos Trust Company through at least February 2024.” Alongside the Paxos press release, the New York regulator issued a Consumer Notice regarding the Paxos-issued binance usd (BUSD) stablecoin.
Redemptions have begun, with nearly $290 million redeemed on Monday, following billions redeemed in recent months. Three months ago, BUSD’s market capitalization was approximately $23.24 billion and more than 30% of its supply has been redeemed in the past 90 days. Redemptions on Monday caused some slight price fluctuations and BUSD dropped to a low of $0.992245 on Feb. 13.
Much of BUSD’s trading today is paired with Tether (USDT), followed by the Turkish lira, Makerdao’s DAI and the U.S. dollar, according to statistics from cryptocompare.com on Monday. Before the Paxos press release on Monday morning, BUSD’s trade volume was around $15 billion, but it has since increased 18% higher to $17.60 billion by 3:15 p.m. Eastern time. In addition to the large amount of redemptions, Binance CEO Changpeng Zhao (CZ) cautions of significant repercussions on the crypto sector if BUSD is deemed a security.
What impact will the recent redemptions and regulatory scrutiny have on the future of BUSD and other stablecoins in the market? Share your thoughts in the comments section below.
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