In the wake of the FTX collapse, U.S. regulators are getting tough on crypto firms. Next on the list? Binance. U.S. financial advisors have shut down issuance of new Binance USD stablecoins via crypto firm, Paxos. According to Binance founder, Changpeng Zhao, New York state’s financial regulators issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.” Paxos’ own stable coin is said to not have been impacted, according to the company.
Zhao tweeted Monday morning, “We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services.” He further mentions that the regulator’s decision meant that “BUSD market cap will only decrease over time,” and that Paxo’s assured Binance that the funds were fully covered by Paxo’s bank reserves.
2/ We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS).
Paxos is regulated by NYDFS.
BUSD is a stablecoin wholly owned and managed by Paxos.
— CZ 🔶 Binance (@cz_binance) February 13, 2023
Binance’s self-issued BUSD is not directly regulated by NYDFS and is independently issued by the crypto exchange on blockchains beyond Ethereum. In simpler terms, Binance can take a single Paxos-issued BUSD, create an analogous BUSD on another blockchain and freeze a corresponding Paxos-issued BUSD.
“Effective February 21, Paxos will cease issuance of new BUSD tokens as directed by and working in close coordination with the New York Department of Financial Services,” Paxos said in a statement, adding that it would “end its relationship with Binance for the branded stablecoin BUSD.”
The recent development comes less than 24 hours after the Wall Street Journal reported Sunday night, citing an unnamed source, that Paxos received a Wells notice, (formal letter to inform recipient of its plans to bring enforcement action) from the U.S. Securities and Exchange Commission (SEC). The company said they were committed to working with law enforcement.
Only time will tell what the future of Binance in the crypto currency world will lie.
See Patrick Bet-David speak with Billionaire, Michael Saylor, as he explains the difference between Bitcoin and Ethereum:
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