Coinbase has proceeded with the planned suspension of Binance USD (BUSD) trading, disabling trading for the stablecoin starting Monday.
“We have disabled trading for Binance USD (BUSD),” the United States-based cryptocurrency exchange said in a March 13 tweet, adding that users will continue to have access to their BUSD funds and will be able to withdraw them at any time.
The exchange initially revealed plans to suspend BUSD trading late last month, citing “listing standards” as being the reason behind the decision. The suspension affects Coinbase.com, Coinbase Pro, Coinbase Exchange, and Coinbase Prime.
The move came after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD), to stop minting BUSD tokens. In a consumer alert, the DFS said it issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”
Subsequently, it was revealed that the SEC has issued a Wells Notice to Paxos and plans to sue the company over its BUSD issuance. The agency argued that BUSD is considered an unregistered security.
Following the regulatory clampdown, Paxos announced it would “end its relationship with Binance” and would stop issuing new BUSD tokens from February 21. However, the company will continue to support and redeem the tokens until at least February 2024.
The BUSD market cap has been trending downward over the past couple of weeks since no new tokens is being issued. According to data by CoinMarkeCap, BUSD’s market cap, which stood at around $16.5 billion earlier this year, has dropped to around $8.4 billion.
Meanwhile, in terms of price stability, BUSD has been able to maintain its dollar peg despite the recent pressure.
USDC Loses Peg Amid Banking Crisis in the US
Over the weekend, USDC, a regulated stablecoin issued by Circle, distanced away from its dollar peg after it was revealed that more than $3 billion of its reserves were held in an account at the fallen lender Silicon Valley Bank.
The stablecoin slid to an all-time low of around $0.8774 on Saturday amid rising uncertainty. However, it started recovering after Circle pledged to cover any shortfall in the stablecoin’s reserves if it does not receive the entirety of the $3.3 billion held at SVB.
Furthermore, US regulators approved plans to backstop depositors and financial institutions linked with parent company SVB. As part of multiple moves that officials approved over the weekend, depositors at both SVB and Signature Bank, which was shuttered Sunday over similar systemic contagion fears, will have full access to their deposits.
As of now, USDC is trading at $0.999, almost around its intended peg of $1. Notably, the stablecoin has seen massive redemptions over the past few days, losing more than $3 billion in market cap amid the saga around US banks.