coinnounce.com
As the government's crackdown on the crypto currency industry became more widespread, New York officials ordered a crypto currency business to stop creating one of the major dollar-pegged coins.
According to a statement released (1) by Binance, the New York Department of Financial Services issued an order to Paxos Trust Co., which produces and lists Binance's dollar-pegged crypto currency, to cease the production of other BUSD tokens. Paxos Trust Co.
According to the crypto currency exchange, Paxos will keep managing redemptions of the product even as we advance.
Stablecoin BUSD, commonly known as Binance USD, is a digital asset pegged exactly to the value of one United States dollar. Binance and Paxos formed a partnership to deploy it in 2019, and both companies stated that stablecoin had received approval from the New York State Department of Financial Services.
Binance has stated that Paxos is the entity that is responsible for issuing and owning BUSD and that the cryptocurrency business only licenses its trademark. According to the information provided on Binance's website, as of February 13, there were 6.2 million people who held BUSD.
Paxos has said in a release that it would suspend the issuance of new BUSD on February 21 and that it will sever its partnership with Binance regarding the branded stablecoin BUSD.
Paxos's native stablecoin, the Pax Dollar, and U.S. dollars will continue to be accepted as payment for BUSD until at least February 2024, according to the announcement.
Increased Action of US Regulators Against Crypto Firms
This year, regulators have increased the attention they pay to crypto currency startups. As per coverage in The Wall Street Journal, the SEC has informed Paxos that it intends to file a lawsuit against the firm for breaching investor protection regulations.
The Securities and Exchange Commission has never before brought infringement proceedings against a major stablecoin issuer.
In recent years, the trading of stablecoins has developed into a lucrative enterprise. Traders who desire an easy way to acquire or sell cryptocurrencies have gravitated to dollar surrogates because these crypto currencies offer a stable token that can be traded into and out of without the need for bank settlements.
The process of exchanging cryptocurrencies into fiat currency often takes several days, which might result in lost trading chances in a volatile market.
Companies like Paxos established a reliable source of revenue by issuing stablecoins and investing customers' cash deposits in short-term U.S. Treasurys. These investments have yielded more since the Federal Reserve hiked interest rates, making them an attractive choice for businesses.
The market capitalization of Binance USD has increased to the point where it is now the third-largest stablecoin.
Because Paxos will no longer be creating the token, the market capitalization is expected to decrease from about $16 billion on Monday. Early on Monday morning, trading activity for the stablecoin was quite close to the value of one dollar.
