Binance announced in September that it would release a number of stablecoins removed from the platform. They were short on volume, therefore offering certain trading pairs to Binance was of little use. The promotion of Binance’s own BUSD initially had a hugely positive impact, but that has now been reversed.
Binance stablecoin not to be trusted?
Of course, banning other stablecoins had the advantage of bringing BUSD much more to the fore. After all, you have a choice of fewer stablecoins. Sure, Tethers USDT is still available, but last year the security of this coin was also compromised. Like many other stablecoins, USDT also lost its link with the dollar. Now on Binance you can only choose from USDT, BUSD and regular deposits in fiat currency.
It was discovered late last year that Binance is using some of its customers’ tokens to pay people who trade with leverage. In the volatile market for cryptocurrencies, that is a big risk, and it caused a big dent in confidence in the crypto exchange. Customers suddenly withdraw large amounts, fearing that Binance the next FTX is.
Market value stablecoin BUSD is shrinking
The BUSD stablecoin has contracted sharply in recent months, according to data from CoinGecko. On November 15, the token hit a record market value of around $23.5 billion. Since then, the coin has shrunk by more than 30% to $15.5 billion. This means that all growth since the beginning of February 2022 has disappeared.
BUSD holders who preferred Circle’s USDC in December faced a temporary problem. Binance automatically converts BUSD into USDC and vice versa, for which it needs a ‘regular’ bank in New York. The problems at Binance started outside office hours, causing customers to wait longer than expected. However, the CEO stated that the balances of banks are fully covered.