Behind the stop minting of BUSD: Unraveling the Conflict Between Binance and Paxos ?

Paxos Trust Company, the entity responsible for generating Binance's stablecoin BUSD, terminated its association with Binance and ceased BUSD issuance on February 21.

This decision followed a consumer alert from the New York Department of Financial Services (NYDFS), instructing Paxos, based in New York, to stop minting BUSD. Paxos CEO Charles Cascarilla emphasized that the move was unrelated to the NYDFS order, stating, "The market has evolved, and the Binance relationship no longer aligns with our current strategic priorities."

In simpler terms, Paxos acknowledges that Binance has become a negatively perceived brand with an uncertain future. The company prefers to align itself with regulatory compliance rather than maintain ties with Changpeng Zhao's altcoin casino.

Paxos is currently engaged in discussions with the U.S. Securities and Exchange Commission (SEC) regarding BUSD's classification as a security. Leaked internal emails reveal these talks, initiated after the SEC suggested that BUSD should have been registered as a security. Paxos CEO confirmed this in an email to employees, asserting that BUSD is not a security, and the company is prepared to defend this stance through litigation if necessary.

This development highlights the tightening regulatory scrutiny on crypto entities, as SEC Chairman Gary Gensler asserts that most tokens are securities, signaling the end of the Wild West era in the cryptocurrency industry.

What does this mean for the industry?

Two key takeaways emerge from the Paxos, SEC, and NYDFS news.

Firstly, the SEC's perception of BUSD as a security implies a likely similar view toward other stablecoins such as Tether, Circle, and GUSD. The regulator appears unsympathetic to tokens resembling USD counterfeits, some of which have been linked to large-scale money laundering and criminal activities.