Investors have pulled more than USD 6 billion out of the Binance -branded BUSD stablecoin in the past month, showing that a recent US regulatory crackdown on crypto is putting pressure on the exchange. New York’s financial regulator last month halted new issuance of the stablecoin known as BUSD citing several unresolved issues relating to Binance’s relationship with Paxos, the company responsible for minting the dollar-pegged token.

Since then, holders have rushed to withdraw their cash, causing the BUSD in circulation to fall by more than a third, according to data from blockchain analytics platform Nansen. Analysts said the outflow could act as a drag on the financial performance of Binance. As Ilan Solot, co-head of digital assets at Marex Solutions, said, this could hurt Binance’s bottom line as BUSD is a significant part of the business.

The outflows come as US authorities step up their scrutiny of the crypto industry following 2022’s unprecedented market crash and a series of scandals that culminated in rival exchange FTX falling into bankruptcy in November. Among their targets are stablecoins, which play a crucial role in crypto trading, allowing investors to switch between various digital tokens without withdrawing their cash in the form of fiat currency. Following New York’s crackdown on BUSD, Binance said it expected BUSD trading volume to move to other stablecoin pairs over time.

BUSD represented roughly a fifth of Binance’s trading volume in 2022, climbing to as much as 40% in December, according to data from CryptoCompare. The impact BUSD has Binance said last year most of its revenues came from trading fees. However, in 2022, it waived charges for trading BUSD against some digital tokens to raise market share.

If Binance generates 90% of its revenue from transaction fees, then it is likely that a reduction in overall volumes will put some strain on the exchange’s revenue, acknowledged David Moreno Darocas, research lead at data provider CryptoCompare. Recently US-listed exchange Coinbase also said it would delist BUSD because the dollar-pegged token no longer meets their listing standards. Binance intended to pull back on potential investments in the US, an announcement that followed the US Securities and Exchange Commission launching a blitz of enforcement actions against crypto companies.

The SEC also recently opposed Binance US’s proposed USD 1bn acquisition of the assets of bankrupt crypto lender Voyager Digital, warning that part of the rescue package may violate securities law. .