Binance, one of the world’s largest cryptocurrency exchanges, has witnessed a $2.5 billion outflow from its stablecoin (BUSD) as U.S. regulators intensified their scrutiny of the digital asset. Binance CEO Changpeng Zhao confirmed on Twitter that the outflow from Binance USD had primarily shifted to Tether, another stablecoin. According to Zhao, the “landscape is shifting” as a result of the regulatory pressures.
Regulatory Pressure on Binance
Stablecoins are digital currencies that maintain a stable value, usually pegged to a fiat currency like the U.S. dollar. Binance USD is the third-largest stablecoin in terms of market capitalization, after Tether and USD Coin. On Monday, the New York Department of Financial Services ordered Paxos Trust Company, the firm behind Binance USD, to halt the issuance of the tokens. The U.S. Securities and Exchange Commission (SEC) also reportedly informed Paxos that the stablecoin should have been registered as a security.
Shift to Tether
As a result of the regulatory scrutiny, many investors have shifted their holdings from Binance USD to Tether, causing Tether’s market capitalization to increase by about $2 billion, according to coinmarketcap.com. The rise in Tether’s market capitalization came after reports that Binance had transferred $400 million to a trading firm managed by Changpeng Zhao. This transfer was made possible through a secret bank account belonging to Binance’s independent U.S. partner, as reported by Reuters.
Impact on Binance Coin
The news of the regulatory pressure on Binance and the outflow of funds from Binance USD had a negative impact on Binance’s native token, Binance Coin. However, the token has since recovered and is currently stable at $306.96.
