Paxos a cryptocurrency exchange has been given an order to stop its use of BUSD tokens by New York financial services regulators. This comes at a time when the crypto industry is facing a crackdown amid the SEC lawsuit.
According to Paxos's official statement, it will stop issuing new BUST tokens from the 21st of February. The statement also mentioned the recent actions taken after receiving guidance from NYDFS.
Paxos Is Facing SEC Lawsuit
Earlier, a major news outlet reported that Paxos is facing a lawsuit from SEC for offering BUSD on the exchange. According to the US regulators, the BUSD is an unregistered security & thus can't be offered by a fintech firm.
The partnership between Binance and Paxos was established in 2019. At that time, both firms agreed to launch BUSD, which was Binance's answer to USDT stablecoin.
But now, it seems that Paxos will have to stop mining new BUSD coins very soon. And when we consider how Paxos was the only one responsible for managing the stablecoin, it would put a serious dent in the coin's market cap.
According to the firm's spokesperson, they will also be reviewing some of their other projects amid the rising regulatory uncertainty.
Currently, BUSD is regarded as the 3rd largest coin in the stablecoin category after the USDT and the USD coin. At the time of writing this, BUSD had a market cap of $16 billion. And if we look at the price, the BUSD was down by 0.19% after this news.
Just last week, Kraken also agreed to end its program of staking in which investors can earn rewards by locking their digital assets for a certain period of time. The crypto exchange also agreed to pay $30 million to the SEC in the settlement.