NYDFS asks Paxos to halt issuance of BUSD; Coinbase affirms currency’s non-security status
According to reports, Coinbase said in its official tweet that this week the New York State Department of Financial Services (NYDFS) asked Paxos to stop issuin…
According to reports, Coinbase said in its official tweet that this week the New York State Department of Financial Services (NYDFS) asked Paxos to stop issuing the stable currency BUSD denominated in US dollars. Coinbase did not know what aspects of BUSD the United States Securities and Exchange Commission (SEC) might be interested in, but the stable currency was not a security.
Coinbase: stable currency is not a security
Interpretation of the news:
Coinbase’s official tweet revealed that the New York State Department of Financial Services (NYDFS) had requested Paxos to discontinue issuing the BUSD stable currency in US dollars. While Coinbase admitted to having no knowledge of the specific SEC-related concerns about BUSD, they affirmed that it is not a security.
The NYDFS is the regulatory body in charge of overseeing the financial services sector in the state of New York. They have the power to regulate all financial products and services offered in the state, including stable coins or digital currencies. The request to halt the issuance of BUSD raises questions about possible regulatory or compliance issues that may have arisen regarding the currency.
BUSD has been in use since 2019, and it was established through a partnership between Paxos and Binance, the cryptocurrency exchange. The BUSD stable coin is one of the most popular digital currencies that backs its value with US dollars. This means that each BUSD token is always backed by a corresponding US dollar held in reserve by Paxos.
Given that the BUSD stable coin isn’t a security, there’s a possibility that the NYDFS request to halt its issuance was related to some other compliance related issue. It’s noteworthy that the regulators have become more vigilant about digital currencies and digital assets over the last couple of years, with a few countries imposing tougher rules, further highlighting the need for compliance.
Coinbase’s confirmation that the stable coin isn’t a security signals that BUSD’s use, exchange, and trading remain unaffected, with the currency seeing relatively little change in value since the announcement of the NYDFS request to Paxos.
In conclusion, the NYDFS request to halt the issuance of BUSD could be related to regulatory issues or compliance concerns. The confirmation by Coinbase stating that BUSD isn’t a security signals no impact on its use, exchange, and trading. Nonetheless, it remains essential to adhere to regulations and comply with the requirements of relevant regulatory authorities.
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