Hong Kong-based CNN has learned that the NYDFS has also sent a letter to Binance, the world’s largest cryptocurrency exchange by trading volume, ordering it to halt its Binance USD (BUSD) stablecoin.
New York’s top financial regulator has ordered Paxos, a blockchain company, to stop minting a major stablecoin, widening a clampdown on the embattled digital assets sector.
Paxos announced Monday that it had been instructed by the New York State Department of Financial Services (NYDFS) to stop issuing BUSD, a Binance-branded stablecoin pegged to the US dollar.
The firm said in a statement that it would stop issuing the token on February 21.
Hong Kong-based CNN has learned that the NYDFS has also sent a letter to Binance, the world’s largest cryptocurrency exchange.
Paxos has announced that customers will be able to redeem their BUSD through February 2024. In addition, they will have the option to redeem their funds in US dollars or to convert their tokens to Pax Dollar, another stablecoin issued by the company.
Paxos also announced that it will be ending its relationship with Binance, the world’s largest crypto exchange. The company did not say why the regulator had ordered it to stop issuing BUSD. The NYDFS didn’t immediately respond to a CNN request for comment outside office hours.
Binance has no involvement in its governance or operation. BUSD is one of the most popular stablecoins in the world, with a circulation of 15.8 billion tokens, according to CoinMarketCap. Stablecoins are digital currencies that are designed to hold steady. They’re usually pegged to real-world assets such as gold or the US dollar.
In a statement to CNN, Binance stressed that, although its name appeared on the coin, “BUSD is a stablecoin wholly owned and managed by Paxos. Binance has no involvement in its governance or operation.”
The BUSD news has unsettled investors. Binance suffered one of its worst-ever days in terms of withdrawals on Monday, with $873 million in net outflows, according to data provider Nansen. “Clearly there’s a number of traders and investors moving to take their funds off the exchange,” Andrew Thurman, Nansen’s content lead, told CNN.
He noted that Binance had seen worse days. In December, a deluge of bad press caused investor jitters, sparking outflows of as much as $3 billion.
However, Thurman remains bullish on the future of Binance, citing the company’s strong fundamentals.
“The company has a really good track record in terms of its technology and its security, so I think a lot of people are still confident in it.
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