Stablecoin issuer Paxos Trust Co. has been ordered by New York's chief financial regulator to stop minting the Binance-branded stablecoin known as BUSD.
Paxos will now end its partnership with Binance, a major cryptocurrency exchange, as it faces a likely lawsuit from the U.S. Securities and Exchange Commission.
- BUSD, the seventh-largest cryptocurrency and third-largest stablecoin worldwide, has around $16B in circulation.
- Binance traders have regularly used the token, which is backed by U.S. Treasuries and cash reserves.
- Paxos said it will stop issuing new BUSD as of Feb. 21. The newly issued order
from New York's Department of Financial Services stems from "several
unresolved issues" tied to Paxos’ oversight of its Binance partnership
via Paxos-issued BUSD.
- In addition to the state order, the SEC
is said to be preparing charges against Paxos over the alleged breaching
of investor protection laws, per a report by the Wall Street Journal.
- The heightened scrutiny places the future of BUSD — and the larger stablecoin market — in a state of uncertainty.
