The cryptocurrency industry suffered a major downtrend in the year 2022. When the past year had begun, the crypto market had become bearish and many had hoped it would recover somewhere in the middle.
Unfortunately, the crypto market recorded no significant recovery throughout the past year. Instead, things continued getting worse and they kept moving south.
The investors continued hoping that the situation would recover but it did not happen. The same year (2022) was dedicated to the worst losses due to major hacks and project crashes such as Terra Network and FTX exchange.
Even the macroeconomic conditions took a huge toll on the cryptocurrency industry. These were the reasons that the crypto market found no strong footing throughout the year 2022.
As the entire crypto market suffered tremendously in the year 2022, only one entity was able to remain resilient to all the negative factors. That particular entity in the crypto market was none other than Binance.
The exchange did not see any decline in its performance and profitability. Instead, it continued expanding and things never looked for the exchange in 2022 at all.
Things have turned Unfortunate for Binance and BUSD
However, the most shocking thing is that now that the entire crypto market has entered the recovery phase in 2023, Binance is facing a decline.
The exchange has come under great scrutiny by regulators from all over the world, especially, in the United States. The US SEC has reportedly gone after the issuer of the Binance USD (BUSD), the stablecoin of the Binance ecosystem.
With the entire crypto market moving in the positive direction, it is Binance and its stablecoin BUSD that is moving in the negative direction.
Paxos Banned from Issuing BUSD
Binance USD is the stablecoin that is offered by the Binance exchange for usage in its ecosystem.
Paxos is a major issuer of stablecoins and its most prominent product is none other than BUSD. Turns out, the US regulators have gone after the issuer of BUSD and have banned it from issuing any more BUSD.
BUSD is a stablecoin that is pegged to the US dollar and the users were investing heavily in the particular token. However, due to the latest happenings, the investors have stopped interacting with it.
With the US regulators going after Paxos, the platform had no choice but to discontinue the issuance of BUSD.
Ever since Paxos made the announcement, the investors have gone on a redeeming spree for the stablecoin. The users are either converting their BUSD tokens into other stablecoins or liquidating them.
It was back on February 13, when the officials at Paxos made the announcement about the discontinuation of BUSD issuance.
Ever since the announcement, the BUSD tokens almost equal to the value of $5 billion have undergone redemption.
When Paxos made the announcement about the discontinuation on February 13, the total number of BUSD tokens circulating the network was 16.1 billion.
From the day of the announcement until now, the circulation has dropped to 11.12 billion BUSD tokens. Despite the token losing its reputation and credibility in the market, it has not lost its dollar peg.
The report shows that despite losing 4.98 billion BUSD tokens in the process, the parity of the token has not been lost. This means that the dollar peg of the BUSD token has not faltered for once, despite the huge downtrend.
Binance Exchange’s BUSD Portfolio
As the matter of BUSD being banned was raised, the Binance exchange itself, started to convert its possession into BUSD to other stablecoins.
However, the Binance exchange is still sitting on a great number of BUSD tokens. According to the estimates, the exchange still has $9.01 in its reserves, as shared by on-chain data analytical firms.
Even the trading volume for the BUSD token has dropped tremendously, moving down to $6.84 billion.