JAKARTA Circle's stablecoin publisher company reported to the New York Department of Financial Services (NYDFS) about the discrepancy in Binance USD (BUSD) stablecoin reserves, according to a Bloomberg report on Sunday.
Circle, which monitors blockchain data, found that Binance does not store enough crypto assets to support the amount of BUSD that has been issued. The report was found from an unnamed internal source.
A number of other companies have also reported problems surrounding BUSD Binance reserves in the past, but Circle's actions are considered significant because they are direct competitors. Binance provides BUSD while Circle issues USD Coin (USDC). Circle is also regulated by NYDFS together with Paxos, which is currently being watched by BUSD-related regulators.
For your information, BUSD (Binance USD) is a stablecoin issued by the Paxos Trust Company with the support of Binance. This stablecoin is designed to maintain a fixed value of 1 USD, ensuring that every BUSD token can be exchanged for the real USD 1.
The BUSD stablecoin can be used for various purposes such as payments, trades, and investments in platforms that accept BUSD as a means of payment or as stablecoins pegged (peg) to US dollar value.
The New York financial regulatory authority (NYDFS) ordered Paxos to stop production of the Binance USD (BUSD) stablecoin today. Paxos announced that they would comply with the request by stopping the issuance of BUSD and cutting ties with Binance in terms of BUSD, as reported by CryptoSlate.
This action comes as the US Securities and Exchange Commission (SEC) seems to be preparing to take action on this issue. The SEC has sent Notification Wells (Wells Notice) to Paxos. However, Paxos says that BUSD is not a security and he strongly disagrees with the SEC.
Currently, USD 15.9 billion (around IDR 230 trillion) BUSD is circulating. Binance CEO Changpeng Zhao said that the stock exchange will continue to support BUSD while reducing dependence on BUSD.
Meanwhile, Paxos said that BUSD can still be exchanged through the Paxos Trust until 2024. Paxos will continue to issue another stablecoin, Pax Dollar (USDP), which currently has a total supply of US$870 million (equivalent to Rp. 12.5 trillion).
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