Tether's USDT Gains $1B as Paxos Burns Over $1.8B of Binance USD Stablecoins

The increase comes as BUSD issuer Paxos faces increasing regulatory scrutiny.

AccessTimeIconFeb 15, 2023 at 10:15 p.m. UTC
Updated Feb 15, 2023 at 10:34 p.m. UTC

Tether’s USDT, the largest stablecoin by circulating supply, has gained some $1 billion in market capitalization as crypto investors flee rival Binance USD (BUSD), which came under regulatory scrutiny earlier this week.

USDT’s market cap has grown to $69.5 billion from $68.5 billion since Monday, according to cryptocurrency price tracker CoinGecko. This is the highest since last June’s crypto market turmoil, when traders placed bets on Tether’s demise.

Tether’s recent gains come as BUSD, which is issued by Paxos under the exchange giant Binance’s brand, has been rapidly shrinking.

Blockchain data by crypto intelligence firm Nansen shows that Paxos has burned more than $1.8 billion worth of BUSD since Monday morning.

The market capitalization of BUSD has fallen to $14.3 billion from $16.1 billion during this period, representing a 11% decline, CoinGecko data shows.

CoinDesk - Unknown
Blockchain transfers shows that Paxos has burned $1.1 billion of BUSD in the past 24 hours. (Nansen)

The $136 billion stablecoin market is in the midst of a shakeup as U.S. regulators ratchet up the pressure on Paxos and BUSD, the third-largest stablecoin.

On Monday, Paxos announced it would stop minting BUSD after Feb. 21, citing orders from the New York Department of Financial Services (NYDFS). Meanwhile, the U.S. Securities and Exchange Commission (SEC) is preparing to sue the firm for issuing unregistered securities, CoinDesk reported earlier this week.

While Paxos’ other stablecoin, the seventh-largest Paxos dollar (USDP), has avoided the regulators’ probing, the token has still experienced some $100 million of net redemptions, culminating in a 11% decrease in supply.

Stablecoins are a type of cryptocurrency whose price is fixed to an external asset, such as the U.S. dollar. If demand falters for a stablecoin, issuers decrease the supply by removing tokens from circulation, a pratice called burning, to keep the price peg.

Other large-cap stablecoins such as Circle’s USDC and MakerDAO’s DAI haven’t budged, indicating that investors have flocked to USDT from BUSD or sold their holdings for fiat money and other digital assets.

Conor Ryder, analyst at digital asset research firm Kaiko, told CoinDesk earlier this week that Tether was poised to be a “clear winner” of the stablecoin market’s reshuffling.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.