New York financial regulators have ordered Paxos Trust Co. to stop issuing Binance’s stablecoin BUSD.
Crypto exchange Binance and Paxos launched USD-pegged stablecoin Binance USD (BUSD) in 2019 with the approval of the New York Department of Financial Services or NYDFS.
Paxos issued a statement on Monday that it will end its relationship with Binance and for BUSD. The company confirmed that it will stop issuing the branded stablecoin BUSD on 21 February. The company further noted that existing tokens will remain fully-backed and redeemable through at least February 2024 for USD or Paxo’s Pax Dollar (USDP).
Paxos stated in the official announcement that the move is directed by the New York Department of Financial Services (NYDFS) and the company is working with the regulator.
The news follows an The Wall Street Journal report that The Securities and Exchange Commission (SEC) was planning to file a lawsuit against Paxos for violating investor protection laws.
Binance CEO Changpeng Zhao responded quickly on Twitter to Paxos’ decision to stop offering BUSD.
He wrote:
We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS).
Zhao added that Paxos has assured Binance that the funds fully covered by reserves in their banks.
He also said:
Binance will continue to support BUSD for the foreseeable future.
Meanwhile, SEC cracked down on another crypto exchange, Kraken, for offering crypto staking services imposing a $30 million penalty and ordering the company to stop offering the service.
