Paxos to Halt BUSD Issuance at NYDFS Request
- The New York Department of Financial Services has ordered stablecoin issuer Paxos to end its relations with Binance and halt the issuance of BUSD.
- All existing BUSD will remain fully backed, and will be redeemable through Paxos until at least February next year.
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Stablecoin issuer Paxos Trust Company will be halting the issuance of new Binance USD (BUSD) stablecoins at the direction of the New York Department of Financial Services (NYDFS), the company said in a press release on 13 February.
According to the announcement, Paxos will cease the issuance of the U.S. dollar-pegged stablecoin and end its relationship with Binance for the token on 21 February to comply with an order from the NYDFS. The company noted that all existing BUSD will remain fully backed, and holders will have the choice of redeeming their funds in USD or converting their BUSD to Pax Dollar (USDP) until at least February next year. Paxos noted in its press release:
“This action does not impact our ability to continue serving new or existing customers, our continued dedication to grow our staff or fund our business objectives. Paxos remains committed to becoming the global leader in the blockchain tokenization infrastructure relied upon by global enterprises as they transition towards faster, safer, fairer and more efficient financial systems.”
In a consumer notice, the NYDFS explained it had ordered the company to halt minting BUSD due to “several unresolved issues” related to Paxos’ oversight of its relationship with Binance in regards to the stablecoin. The regulator also noted it will closely monitor the stablecoin issuer to verify that it can “facilitate redemptions in an orderly fashion subject to enhanced, risk-based, compliance protocols.”
Binance CEO Changpeng “CZ” Zhao took to Twitter to clarify that the BUSD stablecoin was issued, managed, and “wholly owned” by Paxos, and that the move will result in BUSD’s market cap decreasing over time. He also noted that Binance will continue to support BUSD “for the foreseeable future”, but the exchange will be making product adjustments accordingly, such as moving away from using BUSD as the main pair for trading.
- The popular crypto exchange has decided to sell its business in Russia to CommEX, a crypto exchange business that was officially launched on Tuesday.
- Binance noted that it will fully exit the Russian market, and have no ongoing revenue split or any option to buy back shares in the business.
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- The company said it will be suspending its crypto-backed debit card service in the Middle East on 25 August, and in Latin America by 21 September.
- Although no reason was given for the decision, the company noted that “less than 1% of users” in those regions will be affected by the change.
- A spokesperson said the change was due to the “changing market and user needs”, and that Binance will now be refocusing its resources on its main products and long-term goals.
- Launched in March 2022, Binance Connect helped crypto businesses connect with the traditional finance system, and supported 50 cryptocurrencies and networks such as Visa and Mastercard.