UpdatesFeb 16, 2023

Tether (USDT) profits from Binance USD (BUSD) conflict with the SEC

The giant among stablecoins benefits from the problems of one of its key competitors.

Tether (USDT) has seen its market capitalization increase due to the recent attacks by the US Securities and Exchange Commission (SEC) against Binance USD (BUSD). This American authority decided that the stablecoin issued by the Paxos project is a security that should have been registered in accordance with applicable federal law. Everything indicates that due to the disturbing events, investors have started to transfer their funds from BUSD to USDT.

Tether gains from the problems of its competitor

The market capitalization of the largest “stable” cryptocurrency has recently increased from around $68.47 billion on Tuesday to $69.5 billion today. The increase by about USD 1 billion was due to the repression of one of the most important competitors - BUSD.

Tether remains the undisputed leader among stablecoins. The second position belongs to Circle USD Coin (USDC) with a market capitalization of over USD 40.9 billion. Despite recent actions by the SEC, the third largest "stable" cryptocurrency is still BUSD with a market capitalization of over $14.7 billion. It is worth noting that since Monday, the capitalization of BUSD has fallen by over $1 billion.

Crypto market experts, looking at this data, said that panicked investors may have transferred some of the funds held in BUSD to USDT. In addition to the notice from the SEC, Paxos has also received an order to stop minting new BUSD coins. In a recent announcement, the company informed its customers that it intends to comply with the guidelines of the American regulator.

Both Binance and Paxos have assured their users that their funds are fully covered and properly secured. BUSD holders can exchange their coins for US dollars at any time.

The desire to avoid regulatory repression

Analysts are not surprised by the migration of funds from BUSD to USDT. This may be related, among other things, to rumors that Circle, the company behind USDC, also received a similar notice from the SEC.

Investors looking for highly liquid markets have started flocking to Tether, primarily because, unlike Paxos and Circle, it is owned by Hong Kong-based iFinex, unlike the projects mentioned above. The latest data shows that USDT's dominance among stablecoins has recently surpassed 50%.

USDC may also gain from BUSD's troubles

In September 2022, the leading digital currency exchange stopped supporting “stable” cryptocurrencies with the exception of BUSD and USDT. Customers who did not withdraw stablecoins other than the two listed above to external crypto addresses were met with their automatic conversion to BUSD. The current problems with the regulator may definitely favor the USDC.