Tether’s recent gains come as BUSD, which is issued by Paxos under the exchange giant Binance’s brand, has been rapidly shrinking.
Blockchain data by crypto intelligence firm Nansen shows that Paxos has burned more than $1.8 billion worth of BUSD since Monday morning.
The market capitalization of BUSD has fallen to $14.3 billion from $16.1 billion during this period, representing a 11% decline, CoinGecko data shows.
On Monday, Paxos announced it would stop minting BUSD after Feb. 21, citing orders from the New York Department of Financial Services (NYDFS). Meanwhile, the U.S. Securities and Exchange Commission (SEC) is preparing to sue the firm for issuing unregistered securities, CoinDesk reported earlier this week.
While Paxos’ other stablecoin, the seventh-largest Paxos dollar (USDP), has avoided the regulators’ probing, the token has still experienced some $100 million of net redemptions, culminating in a 11% decrease in supply.
Stablecoins are a type of cryptocurrency whose price is fixed to an external asset, such as the U.S. dollar. If demand falters for a stablecoin, issuers decrease the supply by removing tokens from circulation, a pratice called burning, to keep the price peg.
Conor Ryder, analyst at digital asset research firm Kaiko, told CoinDesk earlier this week that Tether was poised to be a “clear winner” of the stablecoin market’s reshuffling.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in Bullish Group as part of their compensation.