• Binance burned $2 billion worth of BUSD on 22 February
• BUSD traded above the $1 peg after the burn
• The total BUSD held in exchange reserves has decreased from $14.3 billion to $10.7 billion
Binance Burns $2 Billion Worth of BUSD
On 22 February, Binance burned $2 billion worth of its dollar-pegged stablecoin, BUSD. This event caused a minor increase in the price of the coin and drew attention to issues with the SEC’s regulatory oversight.
Effects on Price and Volume
The spot price for BUSD went over its peg after the burn, as its reserve on Binance continued to decrease. Despite this, trading activity surrounding the coin was still high; Santiment reported an eight billion dollar transaction volume at press time.
Decrease in Reserves
Following Paxos‘ announcement that it would cease minting new coins, three billion dollars‘ worth of existing coins were redeemed from circulation. This resulted in a 21% drop (over 3 billion dollars) in total reserves between 13 February and press time.
SEC Regulatory Issues
The burn event also brought attention to lingering regulatory issues with the SEC regarding stablecoins backed by US dollars like Tether and USD Coin (USDC). In light of these concerns, many users have been turning to other alternatives such as Bitcoin or Ethereum instead.
Overall, despite some minor fluctuations in price and volume following the burn event on 22 February, work with BUSD proceeded as normal. Total reserves dropped significantly since mid-February but trading activity still remained strong at press time. Additionally, attention was again drawn towards regulatory issues concerning stablecoins issued by US companies like Tether and USDC.