A powerful regulator is directing New York-based crypto company Paxos to stop minting the stablecoin Binance USD (BUSD).
Binance CEO Changpeng Zhao says the New York Department of Financial Services (NYDFS) ordered Paxos, which issues and operates the stablecoin in a partnership with Binance, to freeze production.
Zhao says Paxos will continue to honor redemptions for the stablecoin, which is designed to be pegged to the US dollar.
“Paxos will continue to service the product, and manage redemptions.
Paxos also assured us the funds are safe, and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.”
Reports that the U.S. Securities and Exchange Commission plans to sue Paxos surfaced Monday, but have not been confirmed.
Zhao says he has no insight on the subject, but he believes a lawsuit of that caliber could lead to a watershed moment for the industry.
“IF BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.
Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.
Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.”
Binance USD is the third-largest stablecoin on the market and the seventh-largest crypto asset in existence, with a market cap of $16.1 billion at time of publishing.
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