Paxos To Cease Issuance of Binance USD Stablecoin

According to a representative for Binance, the New York Department of Financial Services (NYDFS) has ordered crypto infrastructure company Paxos to stop issuing the stablecoin Binance USD (BUSD).

“Paxos has informed us that they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS),” they said. “BUSD is a stablecoin wholly owned and managed by Paxos. As a result, BUSD market cap will only decrease over time. Paxos will continue to service the product, manage redemptions, and will follow-up with additional information as required.”

The revelation was initially reported by The Wall Street Journal. The action follows a Friday news that the NYDFS is looking into Paxos.

On February 21, Paxos stated that it would stop issuing new BUSD stablecoins. The business stated that it will honor BUSD redemptions “through at least February 2024.”

“New and existing Paxos customers will be able to redeem their funds in US dollars or convert their BUSD tokens to Pax Dollar (USDP), a regulated US dollar-backed stablecoin also issued by Paxos Trust,” the company said.

The NYDFS ruling has no impact on USDP, pax gold (PAXG), or its business, it continued.

The WSJ reported on Sunday that the US Securities and Exchange Commission (SEC) intends to sue Paxos over BUSD because the stablecoin is an unregistered security. According to the article, which cited unnamed individuals, the SEC informed Paxos via letter that “a possible enforcement action,” per the report, citing anonymous sources. The suit is reportedly for “violating investor protection laws.”

A stablecoin linked to the dollar is called BUSD. It was introduced in 2019 by Paxos and Binance. With a market cap of $16 billion and a total supply of over $6 billion, BUSD is the third largest stablecoin.

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