Tether market cap nears $70B as SEC crypto crackdown hurts stablecoin rivals
The U.S. Securities and Exchange Commission (SEC) wants to sue Paxos for issuing and listing stablecoin Binance USD (BUSD) to the benefit of its top-rival stablecoin Tether (USDT), whose market capitalization has risen to multi-month highs.
The SEC asserts that BUSD, a U.S. dollar-backed stablecoin, is a security, noting that Paxos has violated investor protection laws by white-labeling it.
Related: Paxos ‘categorically disagrees’ with the SEC that BUSD is a security
Since Feb. 13 when the news broke, the BUSD market cap has lost roughly $2 billion, down to around $14 billion as of Feb. 16 — the lowest since January 2022.
As Cointelegraph reported, Binance has seen its withdrawals and BUSD redemptions surge post-Paxos crackdown.
At the same time, USD Coin (USDC), the second-largest stablecoin by market capitalization, has also witnessed capital outflows in reaction to the SEC crackdown news. Its supply decreased from $41.29 billion on Feb. 12 to as low as $40.99 billion on Feb. 14.
However, this figure rebounded to $41.30 billion on Feb. 15 after Circle clarified that it had not received any lawsuit threat from the SEC.
.@circle has not received a Wells notice. https://t.co/lE74zHVLka
Despite recent inflows, however, USDC's market cap remains in a general downtrend since its June 2022 peak of $56 billion — a 25% decline over the past eight months.
The regulatory crackdown on U.S.-based stablecoin firms has been a boon for top-stablecoin Tether, whose market cap has jumped over $69 billion.
69B
Nearly $890 million of inflows since Feb. 12 has pushed Tether's market dominance to 51.25% as of Feb. 15, data shows.
The jump likely suggests that investors were spooked by the crackdown on BUSD and sought safety in Tether USDT.
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