New York authorities order Paxos to stop issuing new stablecoin BUSD

order suspension of new issuance

On the 13th, the New York State Department of Financial Services (NYDFS) ordered Paxos National Trust (Paxos Trust Company) to suspend new issuance of the US dollar-linked stablecoin “Binance USD (BUSD)”.

Paxos, a stablecoin issuing company, is engaged in “custody” business that stores and manages cryptocurrencies on behalf of investors. (BUSD)” issuance.

BUSD, the subject of the suspension order, was a stablecoin developed and co-developed with Binance and issued under the authorization and supervision of the NYDFS. According to the information on the official website, BUSD’s reserves are held in 100% fiat currency (USD) and US Treasuries, and customer funds are always available for 1:1 redemption.

BUSD is the third largest stablecoin by market capitalization after Tether (USDT) and USD Coin (USDC), and is widely used mainly by Binance, the largest exchange that it partnered with in 2019. Because stablecoins are pegged to the value of the US dollar at a 1:1 ratio, they have come in handy in the volatile cryptocurrency market.

In an official statement, a Binance spokesperson confirmed that “Paxos has informed us that the NYDFS has instructed us to stop issuing new BUSD,” adding that “Paxos will continue to provide services, We will manage the reimbursement and follow up as necessary.”

According to the Wall Street Journal on the 12th, the SEC (U.S. Securities and Exchange Commission) claimed that “BUSD is an unregistered security” and issued a warning letter from the viewpoint of violating investor protection laws. (Wells Notice) issued. It indicated enforcement action against Paxos.

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