Market Analysis Report (24 Oct 2022)

Binance’s stablecoin BUSD, issued in partnership with Paxos Trust company, has seen its market capitalization rise sharply over the last few months, surpassing the $20 billion mark.

BUSD is one of the three largest stablecoins by market capitalization, behind Tether’s USDT and Centre Consortium’s USDC. It’s, at the time of writing, the seventh-largest cryptocurrency by market capitalization.

The stablecoin’s market capitalization has been growing after Binance announced it would start converting existing user balances and new deposits of USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) into its own stablecoin.

The conversion essentially meant Binance stopped supporting several major stablecoins including USDC, in a bid to “enhance liquidity and capital-efficiency for users.” Binance’s move has also seen Bitcoin spot trading into BUSD jump 79.2% to 3.84 million BTC in September, as detailed in CryptoCompare’s Exchange Review.

Analysts at JPMorgan have said that Binance’s move also benefits Tether, as it increases the cryptocurrency’s importance in crypto trading. The investment bank noted that Tether’s market share in the stablecoin ecosystem has been declining over the past 18 months.

BUSD is backed 1:1 by assets in reserves, and issues monthly attestation reports on Paxos’ website written by an independent third-party accounting firm.