Exchange's total stablecoin reserves hit a two-year low, with BUSD being abandoned as the main reason

In 2023, mainstream stablecoins USDC and BUSD both experienced a decrease in total circulation due to sanctions from U.S. regulatory authorities and severe interest rate hikes. According to statistical data, the total supply of stablecoins across all exchanges has hit a new low in the past two years.

Exchange Stablecoin Reserves Hit Two-Year Low

According to a report by CoinDesk, citing data from blockchain analytics platform Glassnode, the balance of stablecoins on all exchanges has hit a two-year low, with reserves totaling around $21.6 billion as of 5/1.

This data was at an all-time high in mid-December last year, totaling around $44 billion, but has since halved, decreasing by about $22.4 billion. Upon examining exchange data, it was found that the main reason for this sharp decline was due to BUSD.

Significant Decrease in BUSD Circulation and Usage After Sanctions

According to data from Dune Analytics here, Binance's stablecoin reserves gradually declined from around $22 billion in mid-December to around $8.2 billion currently. Of the $22.4 billion decrease in total stablecoin reserves across all exchanges, Binance accounted for approximately 61.5%, or around $13.8 billion, with the largest decrease coming from BUSD at around $10 billion.

In mid-February this year, BUSD issuer Paxos received an order from the New York Department of Financial Services to cease issuing new BUSD tokens. Subsequently, Binance CEO CZ also announced that BUSD may no longer be used as a primary trading pair, leading to a continuous decline in BUSD reserves on Binance and causing the aforementioned phenomenon.

Read more: Overview of BUSD Incident｜Is Stablecoin a Security? Regulatory Demand to Halt Issuance? Binance's Zhao Changpeng Responds? Any Connection to USDC?

Additionally, according to Glassnode's data, BUSD has hit a two-year low in exchange deposits, active addresses, sending addresses, and receiving addresses, clearly indicating a continuous decline in BUSD usage.

USDT Holds the Top Position, USDC Circulation Still Affected by Unpegging Issues

Aside from the turbulence caused by BUSD this year, recent bank closures have also led to unpegging concerns for USDC, with $3.3 billion in cash backing being at risk at Circle, the issuer of USDC.

Related Read: Circle's Stress Test Concluded! Over the Past Three Days, Around $3 Billion USDC Destroyed, Circulation Decreased by Approximately 8%

While the crisis has been resolved, a look at The Block's data reveals that not only has BUSD's total circulation decreased significantly, but USDC's total circulation has also suffered, dropping from around $41 billion in mid-March to approximately $21.7 billion.

However, amidst the significant decline in the total reserves of the top two stablecoins, USDT has been on the rise against the trend, with a growth of $4 billion in total circulation since the beginning of the year, surpassing $36 billion in total.