Regulator Orders Paxos To Stop Issuing Binance Cryptocurrency (BUSD)

The New York Department of Financial Services ordered Paxos to stop issuing Binance USD (BUSD) tokens, one of the largest dollar-pegged stablecoins in the market, according to the Wall Street Journal.

Binance launched BUSD in partnership with Paxos in 2019, claiming that the cryptocurrency was approved by the New York financial regulator. However, regulators have ramped up pressure on cryptocurrency companies this year, with the US Securities and Exchange Commission (SEC) planning to sue Paxos for violating investor protection laws.

Stablecoins have become a lucrative business in recent years, with investors flocking to dollar substitutes to easily redeem their cryptocurrencies without needing bank accounts.

The problem is that companies like Paxos have found a stable source of income by issuing stablecoins and investing users’ cash deposits in short-dated US Treasuries.

The New York Department of Financial Services’ injunction against Paxos reflects the government’s increased crackdown on the cryptocurrency industry. While stablecoins remain a lucrative source of income for businesses, regulators are stepping up scrutiny to ensure investor protection.

Binance USD (BUSD)

BUSD is a stablecoin created by Binance, the world’s largest cryptocurrency exchange, with 6.2 million holders as of February 13, 2023.

With Paxos ceasing to issue BUSD, the stablecoin’s market cap is expected to fall from Monday’s level of around $16 billion. BUSD has become the third largest stablecoin by market capitalization.

This article is under development.