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