Binance CEO CZ Vows To Support BUSD, Keep it Afloat Despite Regulatory Setback

The post Binance CEO CZ Vows To Support BUSD, Keep it Afloat Despite Regulatory Setback appeared first on Coinpedia Fintech News

The Securities and Exchange Commission (SEC) of the United States intends to prosecute Paxos, the company behind the Pax Dollar (USDP) and Binance USD (BUSD) tokens, over the latter stablecoin. 

After learning of the SEC’s plans, Paxos declared it would stop producing new BUSD tokens. According to a representative for Binance, Paxos is the sole owner and manager of BUSD, a stablecoin. Paxos will maintain the product, oversee redemptions, and provide follow-up with more details as needed. Additionally, Paxos gave the assurance that the money is secure and completely protected by bank reserves.   

Binance CEO Speaks Out

The CEO of Binance in a series of tweets explained that Binance would continue to support BUSD despite the regulatory setback from SEC. 

New York Department of Financial Services (NYDFS) has ordered blockchain company Paxos to stop creating the BUSD stablecoin, which is tethered to the dollar. The United States Securities and Exchange Commission (SEC) has also sent Paxos a wells notice saying that BUSD is unregistered security.

Changpeng “CZ” Zhao, CEO of Binance, has taken efforts to reassure users that their funds are secure despite the planned enforcement action. Zhao stated that BUSD is “wholly owned and managed by Paxos” in a thread on Twitter on February 13 and that Paxos is subject to NYDFS regulation.

Zhao claims that Paxos will keep servicing BUSD and managing redemptions. Additionally, it provided guarantees regarding its reserves, which were subject to independent audits. The Binance CEO predicted that the BUSD market cap will decline over time as a result of the enforcement action and that the exchange would look into stablecoins not reliant on the US dollar.

How does this affect the users? 

Zhao added that despite accepting that users might switch to alternative stablecoin tokens as a result of the enforcement action, Binance would keep supporting the stablecoin on its platform. With a shift away from using BUSD as its primary trading pair for the many tokens accessible throughout the exchange, Binance will also take this into consideration when making “product adjustments.”

The CEO of Binance also issued a warning, stating that the SEC’s and the NYDFS’s actions may have a substantial effect on how the cryptocurrency ecosystem continues to grow.

Zhao added that in order to ensure our users are insulated from any excessive harm, evaluations of other initiatives in certain countries would be required due to continued regulatory uncertainty in specific regions.

Community reaction

The crypto community has appreciated CZ for providing a clear and concise explanation of the matter and addressing all the issues with respect to it.