Key Takeaways Paxos will stop creating new BUSD tokens starting February 21st. This decision is due to new instructions from NYDFS. According to reports, the SEC is also planning to prosecute Paxos. Share this article
Paxos has been ordered to shut down Binance USD, the third largest stablecoin in the crypto market.
end of the bus
Stablecoin issuer Paxos has landed in the regulatory crosshairs.
The crypto company announced today that it will stop mining the new Binance USD (BUSD) token effective February 21, 2022, in accordance with recent directives from the New York State Department of Financial Services.
Stablecoins are cryptocurrencies designed to remain pegged to selected government-issued currencies, such as the US dollar. With a market capitalization of $15.9 billion, BUSD is currently the third largest stablecoin in the crypto market after Tether’s USDT and Circle’s USDC.
Paxos indicated that BUSD remains fully collateralized with US dollar-denominated reserves, and that onboard holders will be able to redeem the coin until at least February 2024. Other Paxos crypto products, such as the Pax Dollar (USDP) and Pax Gold (PAXG), will be unaffected by the NYDFS order.
The firm has not yet disclosed why the regulatory agency ordered the closure of BUSD. However, The Wall Street Journal reported yesterday that the Securities and Exchange Commission plans to sue Paxos for allegedly violating investor protection laws. Per the report, the SEC believes BUSD to be an unregistered security.
Bitcoin advocate Nick Carter claimed in a blog post last week that the US government was attempting to stealthily cut off the crypto industry from the banking sector and deprive it of vital off-ramps. The Obama administration used a similar scheme in the early 2010s to cripple the online poker industry. The actions against Paxos by both the NYDFS and the SEC can be viewed in this context.
Changpeng “CZ” Zhao, CEO of Binance took to twitter To indicate that Binance will continue to support BUSD, it will move away from using it as its main stablecoin for trading.
Disclaimer: At the time of writing, the author of this piece held BTC, ETH and several other crypto assets.
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