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NY Regulator Orders Binance Stablecoin Backer Paxos To Freeze Issuing Tokens

 |  February 13, 2023

Binance founder Changpeng Zhao said Monday that Cryptocurrency firm Paxos will not be issuing new Binance stablecoins under the direction of New York state’s financial regulator until further notice. Paxos’ own stablecoin was not impacted by the order.

The New York State Department of Financial Services issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance,” the regulator said Monday in a consumer alert.

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“We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services,” Zhao said on Twitter. BUSD is Binance’s dollar-pegged stablecoin, with each BUSD hypothetically valued at one dollar, and it is used on Binance to trade cryptocurrencies, including ether and bitcoin.

Stablecoins – cryptocurrency tokens that have been ‘pegged’ to an external reference in order to maintain less volatile pricing – have become a major focus for both crypto miners and regulators, as the crypto industry tries to become more widely accepted as an alternative to ‘traditional banking’.

“Effective February 21, Paxos will cease issuance of new BUSD tokens as directed by and working in close coordination with the New York Department of Financial Services,” Paxos said in a statement, adding that it would “end its relationship with Binance for the branded stablecoin BUSD.”