As Regulatory Challenges Weaken, BUSD Stablecoin’s Dominance Shifts

-Two prominent stablecoins, BUSD and USDC, have had different fates due to regulatory scrutiny.

-Circle’s USDC experienced its first supply increase in over 10 months, marking a significant shift.

-On the other hand, Coin’s BUSD is facing a sharp decline and is close to running out of supply.

The fortunes of USDC and BUSD are very different; USDC has experienced a significant uptrend, rebounding from the US banking crisis, while BUSD is facing a severe supply shortage.

This difference highlights the shifts within the stablecoin market, particularly affected by the regulatory challenges encountered over the past year.

USDC Market Value Soars Whatsminer Miner

USDC’s market capitalization surged at the start of the new year, driven by favorable market conditions. The latest figures show an impressive increase in market capitalization of over $1.6 billion. This marks an increase of 6.6%, bringing the total market capitalization to $26.15 billion.

Cryptocurrency analytics platform CCData reported that USDC’s market capitalization surged for the second consecutive month, confirming this positive trend. Previously, the stablecoin had declined for 11 consecutive months, and its market capitalization briefly passed the $25 billion milestone in January.

USDC trading volume and market capitalization | Source: CCData

Several factors have contributed to this upward trajectory. Notably, Circle announced its intention to go public in a recent filing with the U.S. Securities and Exchange Commission (SEC). This disclosure has played a role in solidifying USDC’s market position.

Additionally, USDC has seen a significant spike in transfers, especially on the Solana blockchain, and data from Artemis shows that Solana-based USDC has played a significant role in driving the stablecoin to its highest transfer volume levels in over a year.

Despite these positive developments, USDC’s current supply is still well below its all-time high of $45 billion.

BUSD Falls Below $100 Million

In contrast, the supply of the CoinBuilder-backed stablecoin, BUSD, has plummeted to an unprecedented low of less than $100 million.

Challenges to this stablecoin came to a head last year when the SEC issued a Wells Notice to BUSD issuer Paxos, causing the creation of additional units of the digital asset to cease. The situation escalated further when the federal agency classified the stablecoin as a security in its legal action against Coin.KAS Miner

BUSD liquidity supply | Source: glassnode

In response to these regulatory developments, CoinSec initiated a strategic shift to encourage users to transition from BUSD to alternative stablecoins like FDUSD. Additionally, it discontinued a number of services related to BUSD, resulting in a reduction in total supply from a peak of over $20 billion to less than $100 million in just one year.