Paxos Trust Company has been ordered by the New York Department of Financial Services (NYDFS) to stop issuing the U.S. dollar-pegged Binance USD (BUSD) stablecoin, The Wall Street Journal reported on Monday. The New York-based finance firm will continue to manage BUSD redemptions.
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- “We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services… As a result, BUSD market cap will only decrease over time.” tweeted Binance Chief Executive Officer Changpeng Zhao on Monday.
- BUSD was co-developed by Paxos and Binance, the world’s largest cryptocurrency exchange. The Ethereum-based stablecoin is issued and managed by Paxos.
- BUSD is the third-largest stablecoin by market capitalization with over US$16.1 billion in circulation, according to CoinMarketCap data. Paxos claims its stablecoin is backed one-to-one by fiat.
- The development comes days after reports unveiled last week that the NYDFS has been investigating Paxos.
- The U.S. Securities and Exchange Commission may also reportedly pursue legal action against Paxos for allegedly issuing BUSD as an unregistered security.
- Paxos is also the issuer of its U.S. dollar-pegged stablecoin, Pax Dollar, the sixth largest stablecoin by market capitalization, and its gold-backed stablecoin, Pax Gold.