BUSD, once the third-largest stablecoin after USDT and USDC, reached a market cap of over $23 billion at its peak. It was issued by Paxos, a New York-based company, for Binance, and was regulated by the New York State Department of Financial Services (NYDFS), ensuring everything appeared solid.
However, in February 2023, the SEC issued a Wells Notice to Paxos, accusing BUSD of being an unregistered security. A Wells Notice is essentially a warning before enforcement action, giving the recipient 30 days to respond. Before Paxos could reply, NYDFS ordered Paxos to stop minting BUSD, marking the beginning of Binance's phasing out of BUSD.
This regulatory crackdown reshaped the landscape for BUSD, showing how regulatory action can swiftly impact even the most established crypto assets.
