U.S. regulator says the reason for the ban on BUSD stablecoin issuance
The New York State Department of Financial Services said that Paxos cannot "safely" issue the cryptocurrency Binance USD
The New York State Department of Financial Services (NYDFS) gave the reason for Paxos' ban on issuing the Binance USD (BUSD) cryptocurrency. A spokesman for the regulator told Reuters that Paxos can not "safely and securely" issue Binance stablecoin.
On Feb. 13, it ordered Paxos to stop issuing new Binance USD tokens.
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The regulator found that the BUSD issuer "violated its obligation to conduct periodic risk assessments and due diligence on users of Binance and the BUSD tokens issued by Paxos to prevent malicious users from using the platform," a NYDFS spokesman told Reuters in a letter.
Paxos has also been the subject of an investigation by the U.S. Securities and Exchange Commission (SEC). It has notified the Stablecoin issuer that it plans to sue it for violating investor protection laws because it believes BUSD is an unregistered security.