Binance, the largest global cryptocurrency exchange, has experienced an outflow of around $831 million in the last 24 hours. Further, Binance users have withdrawn approximately $2.8B in virtual currency, exceeding the $2B in inflows within the same span. As a result, investors have been quick to voice their concerns over the recent outflow, with many worried about the potential impact on the cryptocurrency market.
Blockchain data on Nansen shows users have withdrawn $2.8 billion in crypto assets in the last 24 hours, outweighing $2 billion in deposits over the same period. The withdrawals follow the New York Department of Financial Services (NYDFS) order on Monday to halt the issuance of $16 billion in BUSD stablecoins to Paxos and an upcoming sanctions action by the US Securities and Exchange Commission (SEC). Issued under the Binance brand, BUSD is the third largest stablecoin and accounts for 35 per cent of all Binance trading volume.
Monday’s activity also marked the largest daily net outflows from Binance since November, surpassing those from December when the stock market’s lacklustre report on reserves alarmed investors, according to a data dashboard from crypto investment product firm 21Shares.
According to Nansen’s data, the regulator’s action is damaging the stock market. The roughly BUSD on the platform, with $13.4 billion, is the largest asset in Binance’s reserves after Tether’s USDT. This amount accounts for 22 per cent of the $60 billion assets on Binance. Nansen said that $3 billion in BNB, the native token of BNB Chain managed by Binance, represents almost 5 per cent of all assets on the exchange. Still, blockchain analytics firm Arkham Intelligence says the amount is much higher. Arkham has registered $6.9 billion worth of BNB tokens on the platform.
Walter Teng, vice president of digital asset research at market analysis firm Fundstrat, has tested Binance for withdrawals and reserve assets, given the bulk of Binance-related assets on the platform. “Assuming Binance does not keep customer deposits 1:1, they may face withdrawal pressure,” Teng said. “Ten chains of liquidity for BUSD have already dried up, allowing BUSD to be redeemed for US dollars or an alternative stablecoin, and then customer withdrawals are welcomed as the only viable option,” he said.
United States Securities and Exchange Commission (SEC) had issued a Wells notice to Paxos alleging that Binance USD is an unregistered security. On February 13, SEC ordered Paxos to “cease minting Paxos-issued BUSD” while reinstating its requirements for tokens under its regime to be fully backed by cash or cash equivalents.
