Circle Warns New York: The State Department of Financial Services of New York (NYDFS) ordered crypto firm. Paxos said they will stop issuing new BUSDs after February 21 and work with the NYDFS to manage existing ones. He assured BUSD borrowers that the tokens are ready and will be released at least next year.
Table of Contents
Paxos also indicated that the SEC is considering taking action because BUSD is a privately held security. In a statement, he said, “Paxos disagrees with SEC officials because BUSD is not a security under the federal securities laws.” Both moves by authorities have upset investors.
What It Means for Crypto Investors about Circle Warns New York
Many news outlets are talking about the crypto regulatory crackdown, especially since the Binance USD news comes just days after the SEC asked Kraken to stop staking as a service. But SEC Chairman Gary Gensler has been warning since his first crypto speech in 2021 that many crypto exchanges trade unregistered securities and talking about the dangers of stablecoins. This is not something new.
What does this Mean for BUSD?
But Paxos says all distributed BUSD are supported “1:1 in US dollar terms.” If you own BUSD, you can redeem it. In fact, NYDFS says it will be closely monitoring Paxos to make sure this happens.
The amount of BUSD in circulation is slowly decreasing as people redeem their tokens. Binance founder and CEO Changpeng Zhao tweeted: “BUSD market value will decline over time.” He said Binance is also moving away from using BUSD as the primary trading method on its platform.
What does this Mean for Binance and Binance.US?
Binance is one of the largest crypto exchanges in the industry, and Binance.US – a separate US company – is in the top 10 on CoinMarketCap. The news that Paxos will stop giving BUSD as it travels in the past week of Binance ends on. Deposits in US dollars and deposits on the flagship platform.
NYDFS Supports the Environment
An investigation by Paxos Trust, the provider of Pax Dollar (USDP) and Binance USD (BUSD) stablecoins, found that Circle has a financial advisor based in New York for BUSD securities.
Binance has Unofficial Security
Although the proposal came from Circle in the fall, Binance admitted in January 2023 that there was a time when Binance peg BUSD was not fully supported. However, reports say it is worse than what Binance confirmed.
According to Circle, Binance, the largest crypto exchange in the world, once backed up to $1.7 billion worth of stablecoin using just 100 million USDC in real terms as a contract.
Paxos Investigated, BUSD Ordered Publication Stopped
The news comes a day after we reported that the NYDFS had ordered Paxos to stop issuing BUSD stablecoins and that the Securities and Exchange Commission is investigating the company for issuing unregistered securities.
According to regulators, the stablecoin provider did not operate BUSD “in a secure and efficient manner, based on a high level of oversight,” and was unable to resolve issues related to the BUSD issued to Paxos in a timely manner.
As part of the crackdown, Paxos will stop producing new BUSD starting February 21. However, the users of the stablecoin have at least a year to pay off their debts for dollars or another deposit, USDP.
As a result, Binance has seen an increase in withdrawals over the past 24 hours as users withdraw their BUSD coins.
