According to a Paxos announcement, the company will stop issuing new Binance USD (BUS) tokens as of February 21.
Binance USD is a stablecoin that is tied to the dollar and was released by Paxos under the Binance brand. Jonathan Reiter’s research, which was previously covered by Protos, revealed that Binance Peg BUSD, a token produced by Binance that is pegged to the BUSD, wasn’t always adequately backed.
According to a statement published by the agency, the New York Department of Financial Services (NYDFS) issued the directive to cease issuing new tokens. Additionally, the announcement makes it clear that although Paxos was given permission to issue BUSD on Ethereum, Binance Peg BUSD was not.
The Securities and Exchange Commission (SEC) sent Paxos a Wells Notice on Sunday, according to the Wall Street Journal (WSJ), stating its intention to sue the business on the grounds that BUSD is an unregistered securities.
Stablecoins may be securities, according to SEC head Gary Gensler, who has previously expressed this opinion, pointing out that even if a stablecoin passes the Howey Test, it may still qualify as a security under federal law.
The CEO of Binance, Changpeng Zhao, stated that they must stop using BUSD as their main trading pair since “funds are SAFU.”