Coinbase crypto exchange, has announced the suspension of Binance USD (BUSD) trading as of March 13, 2023.
The decision comes in the wake of a U.S. regulator’s investigation into the stablecoin as a possible unregistered security. The move also reflects Coinbase’s review of BUSD, concluding that it no longer meets the exchange’s listing standards.
BUSD is currently the third-largest stablecoin with a US$10.6 billion market capitalization, according to CoinMarketCap data. Coinbase’s Digital Asset Listings Group manages token listings, and it is responsible for reviewing assets that exclude CEO Brian Armstrong and board members.
However, Coinbase clarified that users would still be able to access and withdraw their BUSD after the suspension. On Feb. 15, Coinbase tweeted that U.S. dollar-backed stablecoins are not securities.
Meanwhile, Paxos, the owner, and operator of BUSD, was ordered by the New York Department of Financial Services (NYDFS) to suspend the issuance of the Ethereum-based stablecoin from Feb. 21, 2023. Paxos is set to support BUSD until at least February 2024.
The SEC issued Paxos a Wells notice earlier this month, warning it of a possible enforcement action due to the stablecoin being seen as an unregistered financial security.
Paxos has stated that BUSD is not a security and is currently in “constructive discussions” with the SEC. Meanwhile, Binance, the world’s biggest crypto exchange, has clarified that it only licenses its brand to Paxos for use with BUSD.
In conclusion, BUSD’s suspension by Coinbase marks a significant development in the cryptocurrency industry. The investigation into the stablecoin as an unregistered security and its subsequent suspension by one of the world’s leading crypto exchanges are indicative of the increasing regulatory scrutiny around stablecoins.