DFS has ordered Paxos to stop issuing BUSD stablecoin, one of the most widely held and traded.
According to DFS: “DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance through Paxos-issued BUSD. In response, on February 13, 2023, Paxos notified customers of its intent to end its relationship with Binance for BUSD.”
Probably not coincidentally, the SEC has issued a wells notice to Paxos threatening an enforcement action against the crypto firm. relating to BUSD. According to the WSJ, “It couldn’t be determined if the SEC notice is specifically related to Paxos’ issuing of the coin, the listing of the coin or both.”
As the research firm Bernstein noted, “The regulator sees Binance International as outside of its control and therefore prefers to “rein in BUSD, via Paxos.”
In other words, more FTX fallout even for well regulated stablecoins . . . . stay tuned.