Binance’s BUSD which is issued by Paxos continues to be one of the largest stablecoins in the crypto market. However, it looks like the stablecoin has now made it onto regulators’ radar as New York regulators have ordered Paxos to stop issuing new tokens.
No More BUSD Tokens From Paxos, Say NY Regulators
On Monday, the Wall Street Journal reported that New York regulators had asked Paxos to stop issuing the Binance BUSD stablecoin. These moves come ahead of the expected enforcement action that is supposed to be brought again crypto companies such as Paxos as more regulation swims into view.
This fact that a Wells Notice was issued to the company is particularly important because more often than not when regulators issue such a notice, legal action is expected to follow. As of this time, Paxos will stop issuing BUSD which the SEC says could qualify as an unregistered security.
After receiving the Wells Notice, the company now has 30 days to respond to it before further action is brought against them. But what’s more alarming for investors in the space is that Fox reporter Eleanor Terrett says more Wells Notices will reportedly be handed out in the next few weeks in an effort to take on the crypto industry.
Crypto Market Takes A Hit
Hours after news broke of the Wells Notice being served to Paxos, the crypto market is already seeing some downside. Bitcoin and Ethereum, the two largest cryptocurrencies by market cap are already trading in the red.
BUSD is also seeing a decline after dropping below its dollar peg following the news. The stablecoin which is the third largest in the space with a market cap of $16.1 billion fell to $0.991 briefly before recovering to be trading at $0.999 at the time of this writing.
The stablecoin is still trading 0.08% below its Sunday price but the news does seem to have affected other stablecoins in the market. USDT, the largest stablecoin issued by Tether, is still maintaining its 1:1 peg with the U.S. dollar, while USDC, the second-largest stablecoin issued by Circle, is slightly down 0.01% and is sitting at $0.9999.
BUSD falls below peg following Paxos news | Source: BUSD/USD on TradingView.com