The US-based blockchain infrastructure platform – Paxos Trust Company – will stop issuing new Binance (BUSD) stablecoins from February 21.
Despite this, the company said it has a “strong business record” and is committed to continuing to serve new and existing customers.
Terminate relationship with Binance
In accordance with instructions from the New York State Department of Financial Services (NYDFS), Paxos stop to hit new BUSD tokens next week (February 21). However, the entity will continue to manage reserves in BUSD dollars, ensuring that all stablecoins have and “always will be backed” 1:1 with reserves denominated in US dollars and kept in remote bankrupt accounts.
Paxos will continue to support BUSD until at least February 2024. Customers will have the option of cashing out their US dollar holdings or converting them to Pax Dollar (USDP) – another company-issued stablecoin pegged to the greenback.
He assured that the regulatory measures will not harm his balance sheet, his long-term objectives or his ability to serve his customers:
“Paxos continues to maintain strong regulatory capital to protect customers, as well as a strong corporate balance sheet to support our long-term business objectives. This action does not affect our ability to continue to serve new or existing customers, our continued commitment to developing our people, or funding our business goals.
Changpeng Zhao (CZ) – CEO of Binance – said BUSD holders shouldn’t worry since Paxos will handle redemptions and “fully cover” their banks’ reserves.
He also said his cryptocurrency exchange should not be involved since the dispute is between the blockchain platform and the US SEC.
“Binance will continue to support BUSD for the foreseeable future. We expect users to migrate to other stablecoins over time. And we will make product adjustments accordingly. for example, abandon using BUSD as the main pair for trading, etc. added the executive.
The NYDFS order appears to have wreaked havoc on the entire cryptocurrency market, with Binance Coin (BNB) being among the most affected. It is currently trading at around $293, which is 5% lower than yesterday.
The previous victim of the SEC
The Commission recently launched an investigation into leading US crypto platform Kraken over a possible breach of rules when offering securities as staking services to US users. Shortly after, the firm terminated such an offer and paid $30 million in reimbursement, prejudgment interest and civil penalties.
The crackdown on crypto staking in the US enforced by the SEC has raised serious concerns. According to Coinbase CEO – Brian Armstrong – this would be a “terrible path” for the world’s largest economy.
He also has Underline the merits of staking, claiming that it brings security, scalability, and reduced carbon footprint.
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