Paxos will stop issuing new BUSD at the request of regulators

In this, the company will continue to redeem the available stablecoins on the market

13.02.2023 - 09:00

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What’s new? The New York Department of Financial Services (NYDFS) has issued an injunction against fintech company Paxos, the issuer of Binance USD (BUSD) and Pax (USDP) stablecoins. The regulator ordered the company to stop issuing new BUSD while continuing to manage the redemption of stablecoins, according to The Wall Street Journal.

News on the WSJ website

Paxos was founded in 2012. It uses tokenization, storage, trading, and settlement technologies for digital assets for corporate clients. In March 2022, it was licensed by the Central Bank of Singapore. In August, it announced the launch of a cryptocurrency exchange jointly with PicPay, a Brazilian payment app. In October, it began preparing to launch a platform for trading cryptocurrency through banks jointly with Mastercard.

What else is known? CoinDesk wrote about the NYDFS investigation into Paxos last week. Earlier, analyst Colin Wu reported that the US Treasury Department urged Paxos to withdraw its application for a banking license, but the company denied those rumors.

In addition, the US Securities and Exchange Commission (SEC) issued an injunction to Paxos based on the results of its own investigation. The SEC believes that BUSD is an unregistered security and intends to hold Paxos liable for the issuance of the asset and violation of investor protection laws.

BUSD, issued by Paxos under the brand of the Binance crypto exchange, is the third largest in the crypto market after USDT and USDC and ranks seventh in the overall ranking of cryptocurrencies with a capitalization of $16,16 billion.

Against the backdrop of increased regulatory attention to the industry, the PayPal payment system suspended the development of its own stablecoin. Paxos acted as a partner in the project.

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