SEC Wells Notice Puts Stablecoins USDC and BUSD in Trouble

• The US Securities and Exchange Commission (SEC) issued a Wells notice to the BUSD issuer Paxos earlier this month.
• The second and third-largest stablecoins have witnessed diverse movements since the news broke by Binance CEO, Changpeng Zhao (CZ).
• According to data provided by Glassnode, the number of USDC sending addresses and BUSD transfers have both dropped to lows while the Mean Transaction Volume (MTV) for BUSD surged to an eight-month high.

SEC’s Pressure on Stablecoins

The US Securities and Exchange Commission (SEC) issued a Wells notice to the BUSD issuer Paxos earlier this month. This news broke by the Binance CEO, Changpeng Zhao (CZ), has caused some diverse movements in the second and third-largest stablecoins.

USDC Sending Addresses Decreased

According to data provided by Glassnode, the number of USDC sending addresses seven-day median average has dropped to 1,384.976 – almost a two-month low. As a result, USDC’s total market cap fell to roughly $40.8 billion on Valentine’s Day following CZ’s tweet about the Wells notice. At present, CoinMarketCap data shows that USDC’s market cap is sitting at around $42.7 billion.

BUSD Transfers Dropped

Glassnode data also reveal that quite similarly, the number of BUSD transfers seven-day median average has plunged to five-month lows; roughly 85.720 was observed on Oct 25 2022 as its previous five-month low. Consequently, according to CoinMarketCap data, BUSD’s market cap has fallen from around $16 billion on February 11th when CZ initially tweeted about SEC’s pressure down to around $10.8 billion currently – a decrease of nearly $6 billion over two weeks ago .

Mean Transaction Volume Increased

On positive note however, Glassnode show that mean transaction volume (MTV) for BUSD surged 8 months high; reaching up till 880 million dollars when compared with its Aug 23 2022 eight months high record which stood at 886 million dollars as per Feb 24th .

Circle CEO Jeremy Allaire’s Views

Jeremy Allaire, CEO of Circle which is responsible for issuing USD Coin said that SEC “is not right regulator” for observing stablecoins , he further added banking regulators could be better option for observing asset class like these due their inherent nature & need for additional compliance requirements .