Binance USD (BUSD) has experienced a sharp decline in active addresses following a regulatory crackdown by US authorities. This development continues a series of declines in the Binance ecosystem in recent weeks.
BUSD Active Address Shows Regression
According to data from Glassnodethe number of active BUSD addresses, based on a seven-day hourly moving average, has dropped to levels not seen since October 23, 2022.
Currently, BUSD averages 94 active addresses per hour compared to the end of 2022, when the average is over 250 active addresses per hour. This represents a 60% drop and is a significant drop for the token.
Meanwhile, activity in the two largest stablecoins, USDT and USDC, has witnessed a mild decline. USDT and USDC fell to 5,242 and 2,291, respectively. BUSD reduced its active address indicating the bearish sentiment that followed the Binance ecosystem.
Binance USD Faces Potential Regulatory Lawsuits
The Binance ecosystem has been rocking in recent weeks. In February, the US Securities and Exchange Commission (SEC) ordered Paxos to stop issuing BUSD. It was also confirmed that the SEC is planning a major lawsuit against Paxos for violating investor protection laws, with the regulator stating that BUSD is an unregistered security.
This has caused ripples in the crypto industry as Paxos is the main issuer of BUSD in partnership with the Binance exchange. US-based exchange Coinbase followed suit by announcing on February 27 that it would stop trading BUSD from March 13. According to the exchange, the asset is not in default. Users will no longer be able to trade stablecoins, but funds will be available for withdrawal at any time.
Related reading: Paxos On Hit List – Why SEC Plans To Slap Stablecoin Issuers With Lawsuits
Due to this situation, Changpeng Zhao, CEO of Binance, thinks that the volume of BUSD will decrease significantly. On February 17, he showed that the capital began to leave BUSD, and most of it was transferred to USDT, and he was not wrong. Since the issuance of the stop order for BUSD was announced, the market capitalization has dropped 40% from $16 billion to $9 billion, according to data from Coingecko.
This negative development contributed to the bearish trend of BUSD, with the coin among the most discarded tokens. Meanwhile, Tether (USDT) seems to be benefiting from the current BUSD regulatory issues. Market capitalization volume has increased by more than 3%, with investors converting BUSD to USDT recently. Data analytics company Santiment also shares this trendswith the number of long-term USDT holders increasing by 16% since the beginning of the year.
Related reading: Binance CEO “CZ” Denies Rumors And Backs Voyager Deal
BUSD’s Struggle Is Felt In The Crypto Market
The BUSD issue has hit the crypto market, with several red coins this week. The leading cryptocurrency Bitcoin fell by 4% this week, and analysts have predicted that the bearish trend may continue for several weeks.
Option images from Binance.com, charts from TradingView, Glassnode.com and Coingecko.com