On February 13, Paxos formally stated that it ended its partnership with Binance for the branded U.S. dollar-pegged stablecoin BUSD.
In compliance with instructions and in conjunction with the New York Department of Financial Services, Paxos will cease producing new BUSD tokens as of February 21.
All current BUSD coins will continue to be fully backed and redeemed through Paxos Trust Company until “at least February 2024,” Paxos said. Customers will be able to transfer their BUSD tokens into Pax Dollar (USDP), another stablecoin created by Paxos, and redeem their assets in US dollars, the company said.
“This action does not impact our ability to continue serving new or existing customers, our continued dedication to grow our staff or fund our business objectives. Paxos remains committed to becoming the global leader in the blockchain tokenization infrastructure […]”
Referring to open transparency reports, Paxos further said that Paxos Trust is a regulated organization that is supervised by the NYDFS and audited by a top-four accounting firm. The USDP and its gold-backed stablecoin Pax Gold (PAXG) will continue to operate by the company using its strong regulatory capital.
On Monday, the CEO of Binance, Changpeng Zhao, also posted on Twitter to say that Paxos had told the exchange that NYDFS had instructed them to stop accepting new BUSD. The CEO emphasized that Paxos issues and manages the stablecoin, suggesting that there are no problems between Binance and authorities.
Zhao said, “As a result, the BUSD market cap will only decline over time.”
The announcement comes soon after NYDFS unexpectedly instructed Paxos Trust to cease issuing BUSD on February 13. Prior to this, Paxos received a warning from the US Securities and Exchange Commission saying that BUSD is unregistered security.