New York Comptroller Orders Paxos To Stop Printing BUSD

US regulators ordered the Paxos to stop printing the new BUSD. (Photo; Doc. 1 Bitcoin Wiki)

JAKARTA – The US regulator, the Securities and Exchange Commission (SEC) has recently sent a notification to Paxos as the issuer of the BUSD stablecoin. The SEC rates BUSD as unlisted securities.

Even the New York Department of Financial Services (NYDFS) as the state financial supervisor has ordered Paxos to stop printing BUSD stablecoin. For information, BUSD is Binance's stablecoin minted through Paxos.

The NYDFS officially “ordered Paxos to cease minting Paxos-issued BUSD due to several unresolved issues regarding Paxos' oversight of its relationship with Binance in relation to Paxos-issued BUSD.”

On the other hand, Paxos acknowledged the notice from US regulators only applies to the BUSD stablecoin as the third largest stablecoin by market capitalization. While the notice does not mention Paxos' stablecoin, Pax Dollar (USDP).

Meanwhile, the SEC declined to comment on the matter due to regulatory policies. The information was submitted by the Wall Street Journal Sunday, February 12 yesterday.

Regulators in the United States have long been concerned about the stability of stablecoins. These concerns were fueled by several notable crypto markets crashes in the past year, including the Terra USD (UST) and Terra (LUNA) collapses and the FTT shake-up that caused the FTX to collapse.

Regulators at home and abroad have expressed doubts about the stability of stablecoins. According to Aaron Kaplan, co-CEO of Prometheum Inc, a fintech startup, stablecoins pose a systemic risk to the financial system if not managed properly.

Nevertheless, the Financial Stability Oversight Council, a US regulatory sub-committee chaired by Secretary of the Treasury Janet Yellen, has conducted a comprehensive assessment of digital assets. The goal is to prevent a financial disaster like 2008 from happening.

Some experts in the financial industry see USDC Circle as a potential future regulatory target. However, they believe that Paxos and Circle may win in court against the SEC. Richard Mico, CEO and CLO of fintech platform Banxa, said that everyone needs to understand the risks and benefits of stablecoins, and manage them properly.