Binance, the world’s largest crypto exchange by trading volume, has seen net outflows of approximately $831 million in the last 24 hours, according to data from blockchain intelligence firm Nansen. Investors seem startled by the regulatory restrictions on the Binance USD (BUSD) stablecoin issued by Paxos and are therefore reducing their holdings on the platform. Here are the details…
Big fund outflow for Binance
Blockchain data on Nansen shows users have withdrawn $2.8 billion in crypto assets in the last 24 hours, outweighing $2 billion in deposits over the same period. The withdrawals follow the New York Department of Financial Services (NYDFS) order on Monday to halt the issuance of $16 billion in BUSD stablecoins to Paxos and an upcoming sanctions action by the US Securities and Exchange Commission (SEC). Issued under the Binance brand, BUSD is the third largest stablecoin and accounts for 35 percent of all Binance trading volume.
Monday’s activity also marked the largest daily net outflows from Binance since November, surpassing those from December when the stock market’s lackluster report on reserves alarmed investors, according to a data dashboard from crypto investment product firm 21Shares.
The stock’s reserves have been retested
According to Nansen data, the regulator’s action is seriously hurting the stock market as the roughly BUSD on the platform, with $13.4 billion, is the largest asset in Binance’s reserves after Tether’s USDT. This amount accounts for 22 percent of the $60 billion assets on Binance. Nansen said that $3 billion in BNB, the native token of BNB Chain managed by Binance, represents almost 5 percent of all assets on the exchange, but blockchain analytics firm Arkham Intelligence says the amount is much higher. Arkham has registered $6.9 billion worth of BNB tokens on the platform.
Walter Teng, vice president of digital asset research at market analysis firm Fundstrat, has tested Binance for withdrawals and reserve assets, given the bulk of Binance-related assets on the platform. “Assuming Binance does not keep customer deposits 1:1, they may face withdrawal pressure,” Teng said. “Ten chains of liquidity for BUSD have already dried up, allowing BUSD to be redeemed for US dollars or an alternative stablecoin, and then customer withdrawals are welcomed as the only viable option,” he said.
BNB Coin lost value
Binance Coin is down more than 9 percent today as investors are considering the possibility of increased regulatory scrutiny in light of the SEC warning that the Binance stablecoin could be considered a security. The news comes after it was revealed last week that US-based blockchain startup Paxos will suspend issuance of Binance USD (BUSD) after review by US regulators. BNB is currently trading below $300 in the $289.5 range for the first time since Jan.
Paxos Trust Company, as we have also reported as Kriptokoin.com, is a New York-based fin-tech company founded in 2012, specializing in blockchain technology. He admitted that a Wells notice lawsuit was filed by the SEC regarding Binance’s issuance of the US dollar-pegged stablecoin BUSD. USDC and USDT have a combined market cap of $109 billion, which is more than 7 times the $15 billion market cap of BUSD.
In a February 13 Twitter thread, CZ admitted that he may have been duped. “We envision users moving to other stablecoins over time,” CZ said. “And we will make product adjustments accordingly. For example, do not use BUSD as the main pair for trading,” he said. Still, CZ expressed hope that US regulators would not issue a notice declaring BUSD a security.
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