U.S. ordered to stop issuing the third most capitalized stablecoin

U.S. ordered to stop issuing the third most capitalized stablecoin

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Author: Robert Strickland
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U.S. ordered to stop issuing the third most capitalized stablecoin
The New York State Department of Financial Services ordered the issuer of the third most capitalized stablecoin to stop issuing new BUSD tokens

The New York State Department of Financial Services (NYDFS) has ordered Paxos Trust to stop issuing new Binance USD (BUSD) tokens, reports The Wall Street Journal (WSJ), citing a statement from Binance.

In doing so, Paxos will continue to manage the redemption of the BUSD token.

BUSD is a Binance-branded cryptocurrency exchange token tied to the U.S. dollar exchange rate. Paxos and Binance released it in 2019, having received NYDFS approval to do so. According to CoinGecko, the asset has a market capitalization of $1.6 billion, ranking it 7th among all cryptocurrencies and third among stablecoins after USDT and USDC.

Last week it became known that the New York regulator is investigating Paxos. The regulator did not disclose the purpose of the probe and declined to comment on the matter, noting only that it is continually examining supervised entities to identify consumer and institutional risks associated with crypto market volatility.

The U.S. Securities and Exchange Commission (SEC) is also scrutinizing Paxos. It has informed the Stablecoin issuer that it plans to sue it for violating investor protection laws. According to the SEC, the BUSD Stablecoin is an unregistered security.

In early February, the SEC outlined its priorities for 2023, including a focus on crypto-assets. The commission said it will increase oversight of the crypto industry in 2023.

Following the announcement that BUSD was discontinued, the Binance exchange's native token lost 2.5 percent of its value in 10 minutes, falling from $315.3 to $307.2. According to CoinGecko, the cryptocurrency is trading at $308.5 as of 11:30 a.m.

 

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