Binance Will Continue To Use BUSD For The Time Being But Is Open To Other Solutions
The New York Department of Financial Services (NYDFS) has directed blockchain company Paxos to stop creating the BUSD stablecoin, which is tethered to the dollar. The United States Securities and Exchange Commission (SEC) has also sent Paxos a wells notice saying that BUSD is an unregistered security.
Changpeng “CZ” Zhao, CEO of Binance, has taken efforts to reassure users that their funds are secure despite the planned enforcement action. Zhao stated that BUSD is “wholly owned and controlled by Paxos” in a thread on Twitter on February 13 and that Paxos is subject to NYDFS regulation.
#BUSD. A thread. 1/8
In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
— CZ 🔶 Binance (@cz_binance) February 13, 2023
Zhao claims that Paxos will keep servicing BUSD and managing redemptions. Additionally, it provided guarantees regarding its reserves, which were subject to independent audits. The Binance CEO predicted that the BUSD market cap will decline over time as a result of the enforcement action and that the exchange would look into stablecoins not reliant on the US dollar.
Zhao added that despite accepting that users might switch to alternative stablecoin tokens as a result of the enforcement action, Binance would keep supporting the stablecoin on its platform.
BUSD as its primary trading pair for the many tokens
With a shift away from using BUSD as its primary trading pair for the many tokens accessible throughout the exchange, Binance will also take this into consideration when making “product modifications.” The CEO of Binance also issued a warning that the SEC’s and the NYDFS’s actions may have a substantial effect on how the cryptocurrency ecosystem continues to grow:
““IF” BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.”
Zhao added that in order to “ensure our consumers are insulated from any excessive harm,” evaluations of other initiatives in certain countries would be required due to continued regulatory uncertainty in specific regions.
In recent years, American officials have targeted a number of bitcoin service providers and tokens. The SEC and Ripple are still engaged in legal conflict over allegations that XRP is an unregistered securities.
In the meantime, Kraken, a cryptocurrency exchange, agreed to stop providing staking services to U.S. clients in February 2023 in exchange for the SEC receiving $30 million in disgorgement, prejudgment interest, and civil penalties. The regulator accused Kraken of failing to register its program for staking digital assets as a service.
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