The United States Securities and Exchange Commission (SEC) has issued a wells notice to Paxos Trust Company over allegations that the Binance USD stablecoin is an unregistered security, as reported by WSJ.
On the other hand, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD. The crypto community has given mixed reactions to the news, with some calling it “FUD” and others speculating that it’s an attack against the Binance exchange.
Despite the intended enforcement action, Binance CEO Changpeng “CZ” Zhao has reassured users that funds are safe and that Paxos will continue to service BUSD and manage redemptions.
The exchange also plans to continue supporting BUSD while acknowledging that users may migrate to other stablecoin tokens. Binance may look into making modifications to its offerings and shift away from relying on BUSD as the primary currency for trading.
Zhao noted that the actions taken by the SEC and NYDFS could significantly impact the ongoing development of the cryptocurrency ecosystem and that ongoing regulatory uncertainty in certain markets would necessitate reviews of other projects.
Paxos to Halt Issuance of Binance USD
Blockchain infrastructure platform Paxos Trust Company will stop the issuance of new BUSD stablecoins amid an ongoing probe by New York regulators. Starting from Feb. 21, Paxos will cease minting new BUSD tokens in accordance with directions from the NYDFS.
The firm emphasized that the current BUSD tokens will continue to be fully supported and can be exchanged through Paxos Trust Company until February 2024 at the latest. Customers have the option to exchange their BUSD for US dollars or convert it to another stablecoin offered by Paxos called Pax Dollar (USDP).
The firm mentioned that the NYDFS regulates it and is regularly audited by a leading accounting firm. Additionally, Paxos will keep its strong regulatory capital to operate both USDP and its gold-backed stablecoin, Pax Gold (PAXG).
As the firm faces regulatory scrutiny from the SEC and NYDFS over allegations that the Binance USD stablecoin is unregistered security, the crypto community is left to wonder about the future of BUSD and its impact on the cryptocurrency ecosystem.
Binance CEO Changpeng “CZ” Zhao has reassured users that funds are safe and that Paxos will continue to service BUSD and manage redemptions. However, the measures taken by the SEC and NYDFS could have a major effect on the evolution of the cryptocurrency landscape.
Ongoing regulatory uncertainty in certain markets may also necessitate reviews of other projects, potentially leading to further uncertainty in the crypto space. Moreover, as Paxos ends its relationship with Binance and halts the issuance of new BUSD tokens, the future of the blockchain infrastructure platform remains in the balance as regulators continue their probe.
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