BUSD represents a Binance-branded stablecoin that was created following a collaboration between the two companies. Paxos will halt BUSD minting on 21 February 2023. These developments come in the context of Paxos’ troubles with the Securities and Exchange Commission and the New York Department of Financial Services, which instructed the company to stop creating the token.
Paxos officials cited by Yahoo expressed that the company continues to maintain a strong regulatory capital in order to protect customers, and that its corporate balance sheet is able to support its business goals in the long term. They also revealed that, even though they will no longer be partners with Binance, this will not affect their ability to continue serving new or existing customers.
As for BUSD, the company will continue to support the token through at least February 2024 in order to allow customers to redeem their funds in USD or convert to Paxos’ other stablecoin, Pax Dollar.
The collaboration between the two entities allowed BUSD to become the third largest stablecoin by market cap while competing with Tether and USD Coin. According to Yahoo, this new announcement puts the future of BUSD in peril.
In 2015 Paxos became the first entity to receive a New York limited purpose trust charter for digital assets from NYDFS. In 2019, Binance has announced plans to launch a dollar-backed stablecoin in the US as it received approval from the New York Department of Financial Services (NYDFS).
Eventually, Binance wanted to challenge Tether and USDC, and in September 2022, the company revealed that it would start to automatically convert three major stablecoins, including USDC, into BUSD for the exchange’s customers. As a result, BUSD’s market share increased rapidly.
Paxos also has an ongoing partnership with PayPal, which has decided to put its stablecoin project on pause for the time being as it tries to better understand the regulatory outlook of digital assets.
Apart from the changing regulatory landscape of cryptocurrencies, PayPal is also concerned about Paxos’ issues, particularly the investigation by the New York State Department of Financial Services. In February 2023, we covered that cryptocurrency firm Paxos has been working with PayPal on a stablecoin project, but Paxos’ future involvement in that project is uncertain at the time of writing.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now