New York Regulator Orders Paxos to End Relationship with Binance Over BUSD
22. February 2023
• Paxos and the SEC are in ongoing conversations regarding the regulatory crackdown on the Binance’s stablecoin BUSD.
• The NYDFS has ordered Paxos to stop issuing new BUSD tokens and terminate its relationship with Binance.
• Townsend Lansing, head of Product at CoinShares, spoke about the feud between BUSD and Paxos in an interview with CNB.
Paxos In Discussions With SEC
Paxos, the first regulated blockchain infrastructure platform behind Binance’s stablecoin BUSD, is in ongoing discussions with the Securities Exchange Commission (SEC) following a regulatory crackdown on this industry. According to CEO Charles Cascarilla, they are engaged in “constructive conversations” with the SEC. He also stated that if necessary, they would be willing to defend their position that BUSD is not a security through litigation.
NYFDS Order To Stop Issuing New Tokens
The issuer of Binance’s BUSD stablecoin has stopped minting the token following an order from the New York State Department of Financial Services (NYDFS). As per their statement on Feb 21st, Paxos will cease issuing new tokens and will work in coordination with NYDFS. This comes after investigations by both the SEC and NYDFS questioning whether stablecoins are securities under U.S jurisdiction or not.
What Is A Stablecoin?
A stablecoin is a cryptocurrency alternative for traders and investors looking to avoid market volatility. Each token is pegged one-to-one to a reserve currency such as U.S dollar or Euro held in reserve by its issuer. In this case, it is Paxos who issues each token associated with Binance’s crypto exchange – known as ‘BUSD’.
Townsend Lansing Interview On Feud Between PAXOS & BINANCE
Townsend Lansing – Head of Product at CoinShares – addressed this feud between PAXOS & Binances’ USDT during an interview with CNB . He further stressed that “BUSD is not a security under federal securities laws”.
The talks between PAXOS and SEC began following lawsuit allegations claiming that ‘BUSD’ was unregistered security under U.S jurisdiction leading to investigations by both SEC & NYDFS into whether stablecoins qualify as securities or not . PAXOS has denied these allegations but have agreed to cooperate with NYFDS orders while engaging in constructive dialogue with SEC regarding their position that ‘BUSD’ isn’t considered a security within federal law .