BUSD Active Address Plunges By 60% Following Regulatory Crackdown

BUSD Active Address Plunges By 60% Following Regulatory Crackdown

Binance USD (BUSD) has seen a sharp decline in active addresses following regulatory crackdowns from US authorities. This development continues a series of declines in the Binance ecosystem over the past few weeks.

Active Address BUSD Shows Regression

According to data from glassnodethe number of active BUSD addresses, based on their seven-day hourly moving average, has dropped to levels not seen since October 23, 2022.

BUSD active address suffers sharp decline
Active BUSD address suffers sharp decline: source @glassnode

BUSD currently averages 94 active addresses per hour compared to the end of 2022 when it averaged over 250 active addresses per hour. This represents a 60% drop and is a significant drop for the token.

Meanwhile, activity in the two biggest stablecoins, USDT and USDC, witnessed a milder drop. USDT and USDC dropped to 5,242 and 2,291 respectively. BUSD’s descending active address indicates the bearish sentiments that accompany the Binance ecosystem.

Binance USD faces 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 has also been 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 BUSD issuer partnered with the Binance exchange. US-based Coinbase followed suit by announcing on February 27 that it would stop trading BUSD effective March 13. According to the exchange, the asset no longer meets its standards. Users will no longer be able to trade the stablecoin, but their funds will be available for withdrawal at any time.

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Related Reading: Paxos On Hit List – Why the SEC Plans to Slap the Stablecoin Issuer With a Lawsuit

Given the situation, Binance CEO Changpeng Zhao estimated that BUSD volumes would be greatly reduced. On February 17th, he indicated that capital was starting to move out of BUSD, and most of it was moving into USDT, and he was not wrong. Since the issuance of BUSD’s stop order was announced, its market capitalization has dropped by 40%, from $16 billion to $9 billion, according to data from Coingecko.

BUSD Market Cap dropped more than 40% in 30 days
BUSD Market Cap down more than 40% in 30 days: source @coingecko

These negative developments have contributed to BUSD’s bearish trend, with the coin among the most discarded major tokens. Meanwhile, Tether (USDT) appears to have benefited from the current BUSD regulatory issues. Its market capitalization volume has grown by over 3%, with investors converting its BUSD to USDT recently. Data analytics firm Santiment also pointed this out. trendwith the number of long-term USDT holders increasing by 16% since the beginning of the year.

Related Reading: Binance CEO “CZ” Denies Rumors, Supports Voyager Deal

BUSD struggles felt in the crypto market

The BUSD woes have spilled over into the cryptocurrency market, with several coins in the red this week. Leading cryptocurrency Bitcoin is down 4% this week, and analysts have predicted the downtrend could continue for a few weeks.

BTC bounced back after a big price drop
BTC bounced back after a big price drop: source @tradingview

Featured image from Binance.com, charts from TradingView, Glassnode.com and Coingecko.com

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