Key Points:
The drop was triggered by a single market sell order worth $647,000, which led to a series of price slippages until it reached the $0.20 level. However, BUSD quickly regained its peg on Binance against DAI as arbitrage traders took advantage of the situation and purchased it for below $1 on Binance and sold it for $1 on another exchange.
At present, there are $3.38 million worth of aggregated sell orders that are below the $1 peg to $0.20. Thus, it would take a $3.38 million market sell to again bring the price to that level, according to Binance’s order book.
BUSD has faced a regulatory challenge this week, as the New York Department of Financial Services (NYDFS) has directed Paxos to halt the issuance of the stablecoin. This move will ultimately lead to a decrease in the supply of BUSD over time.
Coincu previously reported that Paxos published a letter from its CEO, Charles Cascarilla, in which the executive detailed the company’s doomed Binance USD stablecoin, saying, “We Believe Unequivocally that BUSD is Not a Security”, on February 21.
The prevailing precedents used to identify securities in the US are known as the Howey Test and the Reves Test. Under both tests, BUSD does not meet the criteria to be a security. Our stablecoins are always backed by cash and equivalents–dollars and US Treasury bills, but never securities.
Paxos CEO & Co-Founder Charles Cascarilla wrote
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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