Paxos will stop making Binance’s BUSD stablecoin

On Monday, New York-based Paxos stated it will stop minting BUSD, a Binance-branded stablecoin launched in conjunction with the crypto exchange, beginning on February 21. In view of the SEC’s purported intention to sue Paxos and the New York Department of Financial Services’ directive that Paxos cease production of the token, this decision has been made.

Binance USD, or BUSD for short, is a stablecoin pegged 1:1 to the dollar. Binance and Paxos announced in January 2019 that they had joined to produce a stablecoin that had received approval from New York’s financial regulator. On Monday morning, Binance USD fell to a low of 98 U.S. cents, a minor deviation from its dollar peg. As a result of traders shifting their holdings to tether, the stablecoin traded at a discount. On Monday, Binance’s native currency, BNB, dropped by almost 10%.

According to Paxos’s announcement, the SEC has informed the business that it is contemplating taking enforcement action against it for failing to register BUSD as a security. Paxos has said that it is willing to “vigorously fight” its disagreement with the SEC’s view that its Binance USD token is a security.

Paxos categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws. To be clear, there are unequivocally no other allegations against Paxos.

Paxos said in a statement

Paxos indicated in a statement that it will terminate its partnership with Binance on Monday. Even though the company’s partnership with Binance is coming to an end, the company guaranteed its customers that they would still be able to redeem the stablecoin for at least a year after the partnership ends.