Popular blockchain and tokenization infrastructure platform, Paxos has halted the issuance of new BUSD stablecoins, thereby ending its relationship with Binance on the token. The platform announced the development in a Twitter post on Monday. As revealed, this decision comes amidst the ongoing probe by the New York regulator.
Worthy of note that this development comes a few moments after the New York Department of Financial Service (NYDFS) ordered Paxos to stop the issuance. Earlier, the blockchain firm also received a notice from the US Securities and Exchange Commission (SEC), identifying the token as an unregistered security.
Paxos to halt minting of BUSD from February 21, 2023
In line with this directive, Paxos plans to halt the minting of BUSD from February 21, 2023. Although, the protocol insisted that the tokens will still be fully backed and redeemable on its network till 2024. As such, all new and existing customers of paxos are allowed to redeem personal funds in US dollars or convert BUSD token to PAX Dollar.
Meanwhile, Paxos said its decision to halt the issuance of the stablecoins will not hinder its dedication to serve customers. The firm further reaffirmed its commitment to becoming a global leader in blockchain tokenization industry.
Justifying its decision, Paxos said it prioritizes the safety of users’ asset. This thus drives its adherence to strong regulatory capital to protect its strong corporate balance sheet. In a bid to support its long-term business goals, the blockchain infrastructure firm aims to build a faster, safer, fairer, and more efficient financial system.
Binance to remove BUSD as the main pair for trading
Meanwhile, Binance CEO, Changpeng Zhao has reacted to the halting of BUSD issuance by Paxos. According to Zhao, the exchange will still continue to support the stablecoins for the foreseeable future. Although, the CEO admitted that the prevailing development may compel users to migrate to another stablecoins. This, according to him, leaves the exchange to making product adjustments accordingly. Zhao said one of the adjustments is that Binance will move away from using BUSD as the main pair for trading.
CZ clarified that Paxos owns and manage BUSD. This thus means the stoppage of its issuance will decrease its market cap over time. He admitted that the activities of SEC and NYDFS poses a significant impact on the crypto sphere. Going forward, the Binance CEO reiterated the affirmation by Paxos on the safety of the funds. According to Zhao, the funds remain fully covered by audited reserves in their banks.