Binance’s stablecoin has clocked up about $6 billion worth of outflows this month in the wake of a US regulatory crackdown, according to market tracker CoinGecko.
The investor exodus came after Paxos Trust Company, which issues Binance USD, was warned by the US Securities and Exchange Commission (SEC) that it should have registered the product as a security and it was considering taking action against the platform.
On the same day, February 13, New York’s chief financial regulator said in a consumer alert that it had ordered Paxos to stop creating the token.
An NYDFS spokesman later said that Paxos violated its obligations for “tailored, periodic risk assessments” and due diligence checks on Binance and Binance USD customers needed to stop “bad actors from using the platform”.
On Wednesday, the value of all Binance USD was around $10.5 billion, down from $16.1 billion on February 13, reported CoinGecko.
Analysts said the NYDFS move represented a setback in Binance’s efforts to gain market share from larger stablecoins.
SEC chairman Gary Gensler has previously said he believes some stablecoins to be securities.
- Reuters with additional editing by Sean O’Meara