Binance’s BUSD Stablecoin Supply Halted by Paxos
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Paxos Trust Company, a blockchain infrastructure platform, has announced a halt to the issuance of new Binance USD (BUSD) stablecoins. The decision was made due to an ongoing investigation by New York regulators.
Effective February 21st, Paxos will discontinue the creation of new BUSD tokens in accordance with instructions from the New York Department of Financial Services (NYDFS).
However, Paxos has reassured its customers that all existing BUSD tokens will continue to be fully backed and redeemable through the Paxos Trust Company until at least February 2024. Customers will still have the option to redeem their funds in U.S. dollars or convert their BUSD tokens to Pax Dollar (USDP), another stablecoin issued by Paxos.
“This action does not impact our ability to continue serving new or existing customers, our continued dedication to grow our staff or fund our business objectives. Paxos remains committed to becoming the global leader in the blockchain tokenization infrastructure […]”
According to Paxos, the firm operates as a regulated institution overseen by the NYDFS and regularly audited by one of the top four accounting firms. This ensures public transparency and demonstrates their commitment to maintaining a strong regulatory capital base for their USDP stablecoin as well as their gold-backed Pax Gold (PAXG).
Binance CEO Changpeng, on Monday reported on twitter that Paxos informed the exchange that they have been directed by the NYDFS to halt new BUSD issuance. Zhao emphasized that BUSD is issued and managed by Paxos, indicating that there are no issues between Binance and regulatory authorities.
Zhao stated that due to the directive, the market cap of BUSD is expected to decrease over time. At present, BUSD is the seventh largest cryptocurrency by market value with a market cap of $16 billion. Although its value has slightly fallen from its $1 peg to $0.998, this is not unusual for reserve-backed stablecoins, which sometimes fluctuate between $0.9 and $1.
Recently, the NYDFS gave an abrupt order to Paxos Trust to cease the issuance of BUSD on February 13th. This follows a notice issued by the United States Securities and Exchange Commission to Paxos, alleging that BUSD is an unregistered security.
