Binance USD (BUSD) Stabilizes at $1 After CEO Clarifies Connection to Paxos-Issued Token
- Binance USD (BUSD) is stabilizing back to its intended $1 peg after Binance CEO Changpeng Zhao clarified the connection between BUSD and the Paxos Trust Co.-issued token.
- Paxos has since burned over $700 million of BUSD tokens since Monday.
- Despite ongoing regulatory pressure, Binance will continue to support BUSD for the foreseeable future.
Background on the Issue
The Binance USD (BUSD), a stablecoin backed by short-term treasuries and cash-like assets, rallied to $0.9997 in European morning hours on Wednesday, recovering from a two-year low of $0.9950 hit after the New York Department of Financial Services (NYDFS) on Monday ordered Paxos to stop minting more tokens.
Changpeng Zhao’s Comments on the Connection Between BUSD and Paxos
During a Twitter Spaces session on Tuesday, Zhao clarified that Binance does not issue BUSD. „We have an agreement to let them [Paxos] use our brand, but that’s not something we created,“ he said. He then added that „Paxos will continue to service the product, and manage redemptions,“ assuring users that funds are #SAFU and fully covered by reserves in their banks with their reserves already audited multiple times by various audit firms.
Impact of Regulatory Pressure on Market Cap
The regulatory pressure could impact BUSD’s market cap, which will decrease over time. If ruled as a security by courts, it would significantly impact development of crypto industry in jurisdictions where it is ruled as such.
