Binance USD (BUSD) Stabilizes at $1 After CEO Clarifies Connection to Paxos-Issued Token
- Binance USD (BUSD) has stabilized at its intended $1 peg after Binance CEO Changpeng Zhao clarified the connection to the Paxos Trust Co.-issued token.
- Paxos has already burned over $700 million of BUSD tokens since Monday.
- Despite the ongoing regulatory uncertainty in certain markets, Binance will continue to support BUSD for the foreseeable future.
Connection Between BUSD and Paxos Explained
Binance USD (BUSD), the third-largest stablecoin by market cap, is a stablecoin backed by short-term treasuries and cash-like assets. On Monday, it rallied to a two-year low of $0.9950 after the New York Department of Financial Services (NYDFS) ordered Paxos to stop minting more of the tokens. During a Twitter Spaces session on Tuesday, Binance CEO Changpeng Zhao clarified that Binance does not issue BUSD, but rather has an agreement with Paxos allowing them to use its brand. He also reassured users that their funds are safe as Paxos has already burned over $700 million of BUSD tokens since Monday.
Long-Term Support for BUSD From Binance
Though regulatory pressure could impact on its market cap which will decrease over time, depending on rulings from courts regarding whether or not it is classified as a security in certain jurisdictions, Changpeng Zhao assured users that they would continue to support BUSD for the foreseeable future. He also noted that product adjustments may be necessary should users begin migrating away from it towards other stablecoins over time.
Consequences for Crypto Industry if Ruled as Security
Should such ruling occur and deem it a security in certain jurisdictions, this could have major implications for the development of cryptocurrencies being traded there due to increased regulation imposed upon them by authorities.
In conclusion, despite ongoing regulatory uncertainty surrounding certain crypto assets including those deemed as securities by local laws and regulations, exchanges like binance remain determined to protect their customers’ funds and adjust operations accordingly depending on market movements and developments in legal stances taken against digital assets where needed.