Stablecoins' Market Cap Has Been Falling for Nearly a Year, Report Reveals

A newly published report reveals that in February, the total market capitalization of the stablecoins in the sector fell by 0.68% to $136 billion, making their lowest market capitalization since September 2021 and the eleventh consecutive monthly decline.

CryptoCompare’s latest Stablecoins & CBDCs Report adds that the total market share of stablecoins in the sector is now sitting at 11.4%, down from around 12.31% in January. This is their lowest market share since April 2022.

The decline, the report adds, highlights the “recent rally in the prices of crypto assets and the declining stablecoin market cap.”

The report also notes that the market capitalization of Binance USD (BUSD), a stablecoin whose issuer Paxos has been ordered by the New York Department of Financial Services (NYDFS) to stop issuing it, has fallen 18% to $13.2 billion, likely as a result of the order.

Moreover, Paxos has been told by the U.S. Securities and Exchange Commission (SEC) the regulator is planning to sue it for violating investor protection laws in a letter known as a Wells notice, which it uses to inform entities of possible enforcement action.

The noticed alleged Binance USD (BUSD) is an unregistered security. BUSD is a Binance-branded stablecoin issued by Paxos and listed on several exchanges, including Paxos’ itBit platform.

CryptoCompare’s report adds that meanwhile, the market capitalization of USDT has increased by $2 billion. The figure, coupled with a 676% rise in BUSD/USDT trading volume on February 13, suggests that a large part of the BUSD has been swapped for USDT on the exchange.”

In February, the market share of USDT’s stablecoin increased from 48.7% to 51.7%, marking its highest level since October 2021, the report adds.

Following the SEC’s move against BUSD, there were significant outflows of Paxos’ stablecoins. This led to a 15.8% and 24.37% decline in the market cap of BinanceUSD (BUSD) and Pax Dollar (USDP) to $13.3 billion and $729 million, respectively. As a result, USDD surpassed USDP as the 7th largest stablecoin, with its market cap rising 0.57% to $724 million in February.

The decline in BUSD may have benefited Tether’s USDT and TrueUSD (TUSD), as their market capitalization increased by 3.85% and 2.31% to $70.4 billion and $968 million, respectively. In contrast, the market cap of USD Coin (USDC) fell 1.76% to $41.4 billion, the report details.

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