With this in mind, the NYDFS (New York State Department of Financial Services) regulator has announced that it will halt the production of stablecoins. The status of stablecoins has long been controversial in the United States. In particular, the distribution of a single currency through dozens of different stablecoins has proven undesirable from the beginning.
This Could be the Beginning of NYDFS Sanctions!
The US regulator has asked Binance to stop stablecoin production. Although it can be explained as in the text, it should not be forgotten that this situation is actually an “order” worth its weight in gold. This is because NYDFS, the regulator, can use this as a sanction in the medium term.
First Step: PAXOS
The NYDFS ordered Paxos, a blockchain startup, to stop producing BUSD, a Binance-branded stablecoin pegged to the US dollar.
The company announced in a press release that it will stop issuing tokens on Feb. 21. The statement said that the tokens currently in circulation are “backed one-to-one by U.S. dollar reserves and will always be backed.”
Paxos told its customers that they will be able to use their BUSD until February 2024 and will have the option to transfer their tokens to Pax Dollars, another stablecoin created by the company.
Separation From Binance
Paxos also announced that it will “end its relationship” with Binance, the world’s largest crypto exchange. NYDFS, which did not explain why it stopped issuing BUSD, told CNN that the decision was “the result of several unresolved issues related to the oversight of the relationship between Paxos and Binance.”
However, this should basically be seen as a warning to Binance about PAXOS. After all, there still seems to be a very serious atmosphere of distrust against both cryptocurrency exchanges and Binance in America following the FTX bankruptcy. Although no concrete steps have been taken in this regard yet, it seems that these steps will be taken gradually in the near future.
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