key takeaways
- Paxos will stop minting new BUSD tokens from February 21.
- The decision follows new instructions from the NYDFS.
- The SEC is also reportedly planning to sue Paxos.
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Paxos has been ordered to discontinue Binance USD, the third largest stablecoin in the crypto market.
The end of BUSD
Stablecoin issuer Paxos has landed in the crosshairs of regulators.
The cryptocurrency company Announced today that it would stop minting new Binance USD (BUSD) tokens effective February 21, 2022, in accordance with recent instructions from the New York State Department of Financial Services.
Stablecoins are cryptocurrencies that are designed to keep pace with chosen government-issued currencies, such as the US dollar. With a market capitalization of $15.9 billionBUSD is currently the third largest stablecoin on the crypto market, after Tether’s USDT and Circle’s USDC.
Paxos indicated that BUSD remained fully collateralized with US dollar-denominated reserves, and that incorporated holders would be able to redeem the currency until at least February 2024. Other Paxos crypto products, such as Pax Dollar (USDP) and Pax Gold (PAXG), did not will be affected by the NYDFS order.
The firm has yet to disclose why the regulatory agency ordered the closure of BUSD. However, the Wall Street Journal reported yesterday that the Securities and Exchange Commission planned to sue Paxos for allegedly violating investor protection laws. According to the report, the SEC believes that BUSD is an unregistered security.
Bitcoin Advocate Nic Carter claimed in a blog post last week that the US government was trying to stealthily isolate the crypto industry from the banking sector and deprive it of significant off-ramps. The Obama administration employed a similar scheme to cripple the online poker industry in the early 2010s. The move against Paxos by the NYDFS and the SEC could be seen in this context.
Binance CEO Changpeng “CZ” Zhao took to Twitter to indicate that Binance would continue to support BUSD, but stop using it as its primary stablecoin for trading.
Disclaimer: At the time of writing, the author of this article owned BTC, ETH, and various other crypto assets.
