As a result of an order from the New York Department of Financial Services to Paxos Trust Company to cease minting Binance USD tokens, the third biggest stablecoin, Binance USD (BUSD), is on the verge of collapsing. Paxos has reached an agreement to stop mining as of February 21. As a direct consequence of this, the value of the BUSD has been unlinked from that of the dollar.
According to CoinMarketCap, this occurrence contributed to a decrease in the price of the seventh-largest cryptocurrency and the third-largest stablecoin. Binance’s stablecoin, BUSD, had just decoupled itself from the dollar at the moment.
The CEO of Binance, CZ, said that the New York Department of Financial Services (NYDFS) monitors Paxos and that, as a result of the halt of BUSD minting, the market cap of BUSD “will only fall over time.”
It is expected that Paxos will end its cooperation with Binance at the same time that it will guarantee the owners of BUSD that each currency would be tied 1:1 to the US dollar and that a reserve will back the denomination.
Since Monday morning, the BUSD has not been able to break beyond the $1 threshold. The emergence of volatility in stablecoin demonstrates the negative effect of regulatory action, which may put pressure on Binance, the fourth biggest cryptocurrency exchange.
Compiled by Coinbold