Altcoin News: BUSD Active Address Plunges By 60% Following Regulatory Crackdown
Binance USD (BUSD) has suffered a steep decline in active addresses following the regulatory crackdown by U.S. authorities. This development continues a series of dips within the Binance ecosystem in recent weeks.
BUSD Active Address Shows Regression
According to data from Glassnode, the number of active BUSD addresses, based on its seven-day hourly moving average, has dropped to levels not seen since October 23, 2022.
Currently, BUSD is averaging 94 active addresses per hour compared to the end of 2022, when it averaged more than 250 active addresses hourly. This represents a decrease of 60% and is a significant downturn for the token.
Meanwhile, activity on the two largest stablecoins, USDT and USDC, has witnessed a milder dip. USDT and USDC are down to 5,242 and 2,291, respectively. BUSD decreasing active address indicates the bearish sentiments trailing the Binance ecosystem.
Binance USD Facing Potential Regulatory Lawsuits
The Binance ecosystem has been rocked 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 alleging that BUSD is an unregistered security.
This caused ripples in the crypto industry as Paxos is a major issuer of BUSD in partnership with the Binance exchange. U.S.-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 no longer meets their standards. Users would no longer be able to trade the stablecoin, but their funds will be available for withdrawal anytime.
Related Reading: Paxos On Hit List – Why SEC Plans To Slap Stablecoin Issuer With A Lawsuit
Given the situation, Changpeng Zhao, the CEO of Binance, estimated that BUSD volumes would be greatly reduced. On February 17, he indicated that capital was beginning to leave BUSD, and most of it was moved to USDT, and he was not wrong. Since the issuance of the stop order for BUSD was announced, its market capitalization has fallen by 40% from $16 billion to $9 billion, according to data from Coingecko.
These negative developments have contributed to the bearish trend of BUSD, with the coin among the top most dumped tokens. Meanwhile, Tether (USDT) appears to have benefited from BUSD’s current regulatory problems. Its market cap volume has grown by over 3%, with investors converting their BUSD to USDT recently. Data analysis firm Santiment also indicated this trend, with 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 Struggles Felt In The Crypto Market
BUSD troubles have cascaded into the crypto market, with several coins in red this week. The leading cryptocurrency Bitcoin is down by 4% this week, and analysts have predicted that the bearish trend could continue for a few weeks.
Featured image from Binance.com, charts from TradingView, Glassnode.com and Coingecko.com