The stablecoin market has emerged as a big target for US regulators. Following the news that BUSD, Binances’s dollar-based stablecoin managed by Paxos, was being targeted by regulators, industry observers began to wonder which shoe would drop next. According to crypto analyst firm Nansen, wallets on Binance are bulking up on USDC, Circle’s dollar stablecoin, by a dramatic amount. Over 1.8 billion in USDC is currently held in one of Binance’s wallets, the highest amount in the past three months.
Interesting to see the amount of USDC on Binance increase so much since the BUSD news (over 1.5B increase in the L7D)
Expected the amount of USDT to increase much more than USDC given that you can't trade using USDC
*Note: Only covers ERC-20 versions of the tokens* pic.twitter.com/s0OpRrgDMB
— Martin Lee | Nansen 🧭 (@themlpx) February 21, 2023
At the same time, Nansen predicts that holdings of USDT (Tether) will rise to greater amounts as you can’t trade with USDC.
Legislation regulating stablecoins is on the way, but in the interim, regulators are taking a sterner approach to stablecoins as some perceive them as unregulated securities. Stablecoins are a key component of the entire crypto ecosystem as these digital assets act as on/off ramp for traders.