Paxos to Stop Minting Stablecoin BUSD Following Regulatory Action

Stablecoin issuer Paxos will stop minting new Binance USD ($BUSD) tokens following the threat of legal action from the U.S. Securities and Exchange Commission (SEC).

It was reported on Sunday that the SEC intended to sue Paxos for selling $BUSD as an unregistered security. This came only days after CoinDesk reported that Paxos was under investigation by the New York Department of Financial Services (NYDFS).

$BUSD is a Binance-branded stablecoin issued and managed by Paxos. Following the news of the SEC's legal action, Binance issued a statement that it would be reviewing projects in uncertain markets where regulatory uncertainty could cause detriments to its users.

"All $BUSD tokens issued by Paxos Trust have and always will be backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts," Paxos said in a statement on Monday.

Following Sunday's news, some $52 million of $BUSD were sent to exchanges in a 24-hour period, indicating a desire, as per data by CryptoQuant, indicating a desire by users to turn them into fiat or other stablecoins.

Read more: SEC Chief Gensler Warns Crypto Firms to Comply With Rules After Kraken Shutters US Staking Program