YEREVAN (CoinChapter.com) – The market capitalization of USD Coin (USDC), the fifth largest cryptocurrency and the second largest stablecoin issued, has increased by $500 million to $41.5 billion since Feb 13, according to CoinMarketCap.
The uptick occurred after Circle, the US-based crypto firm behind the USDC issuance, blew the whistle on Binance’s alleged mismanagement of its BUSD stablecoin. So let’s dig in and see what happened.
USDC beats BUSD
Notably, USDC was not doing well year-to-date, while its competitors, Tether (USDT) and Binance USD (BUSD), gained more traction. As a result, the USDC market cap declined 8% from Jan 1- Feb 13. However, the BUSD controversy turned things around for both Circle and Tether, judging by the chart below.
As mentioned, USDC went from $40.8 billion in market cap on Feb 13 to $41.5 billion on Feb 16 and still rising at the time of writing.
The stablecoin saw an uptick in median transaction volume, which peaked at a month-high of $1,557, according to the analytical platform Glassnode.
Also read: What happens to crypto if Tether (USDT) collapses?
Circle Blew the Whistle on BUSD
Per Bloomberg’s report late on Feb 13, Circle was the one to call regulatory attention to the not-so-stable BUSD stablecoin. The latter witnessed $831 million worth of outflows from the Binance exchange on Feb 15 alone.
In detail, Circle issued a complaint to the New York State Department of Financial Services in Nov 2022 regarding the alleged mismanagement of funds backing the Binance assets.
Circle’s team had unearthed blockchain data that showed Binance did not store enough crypto in reserve to support tokens it had issued, according to a person familiar with the matter who asked not to be named discussing private information.
Also read: Russia-Operated Giant ADVcash Feeding Binance? Let’s Dive.
Notably, Binance’s BUSD was partially issued by Paxos, which the SEC threatened with a lawsuit due to the evidence. The watchdog subsequently directed Paxos to end its relationship with Binance, citing “several unresolved issues related to Paxos’ oversight of its relationship” with the exchange regarding BUSD.
Paxos failed to address key deficiencies, requiring further Department action, ordering Paxos to cease minting Paxos-issued BUSD. The Department is monitoring Paxos closely to verify that the company can facilitate redemptions in an orderly fashion subject to enhanced, risk-based compliance protocols.
stated the regulator.
The rivalry between Binance and Circle has been incubating for some time. In Sep 2022, the former implemented a policy that automatically converted any deposits of USDC and some other stablecoins on its exchange into BUSD, effectively reducing Circle’s share of the general stablecoin market. However, the recent turn of events could put USDC back on the horse.
However, US Securities and Exchange Commission’s (SEC) heightened attention to stablecoins could backfire on USDC.
Is USDC on SEC Radar?
Notably, SEC cracking down on Circle is still a rumor, spurred on by the recent lawsuit against Kraken and the Wells notice to Paxos. Brian Armstrong, the CEO of the largest US crypto exchange Coinbase, condemned the regulregulator’soach, citing the SEC’sSEC’sility to provide regulations.
America risks losing its status as a financial hub long term, with no clear regs on crypto and a hostile environment from regulators. Congress should act soon to pass clear legislation. Crypto is open to everyone in the world, and others are leading. The EU, the UK, and now HK.
said the executive.
So, is Circle still flying safely under the radar? The compacompany’sf Strategy Officer says NO.
Also read: Bitcoin Eyes $25K amid $86M Short Liquidations – But Macro Headwinds Persist.
Despite the recent uptrend in market cap, USDC could also fall under the SEC’sSEC’stiny in the current quarter.
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