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BNB declines after Paxos ordered to stop BUSD issuance

By:
on Feb 13, 2023
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  • Binance Coin declines on regulatory news around BUSD and Paxos
  • BNB price fell 6% on Monday after New York regulator asked Paxos to stop minting new BUSD.
  • Binance CEO Changpeng Zhao says his exchange will continue to support BUSD but is looking at other options too

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Binance’s native coin BNB has declined nearly 6% in the past 24 hours, trading to lows of $289 on major cryptocurrency exchanges. According to CoinGecko data, Binance Coin price hit highs of $321 late Sunday, but is now trending at levels last seen in mid-January.

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Binance Coin dumps after Paxos ordered to stop BUSD issuance

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BNB price falling below $290 early Monday following news that Paxos Trust had been asked to stop issuing the Binance USD (BUSD) token. BUSD is a stablecoin pegged on the US dollar, and is wholly owned by US-regulated Paxos. The company also mints the Pax Dollar (USDP) stablecoin.

The order to stop minting new BUSD tokens came from the New York Department of Financial Services (NYDFS). There are also reports that the US Securities and Exchange Commission (SEC) is suing Paxos for offering an “unregistered security.” BUSD is a key stablecoin in the Binance ecosystem and negative news definitely had to have an impact on related assets.

But despite the negative reaction seen in BNB price, Binance CEO Changpeng Zhao has said the crypto exchange will continue to support BUSD. He pointed out that while BUSD bears the Binance USD name, Binance neither issues nor handles customer redemptions.

However, given the regulatory uncertainty, Binance could look to pivot away from BUSD as its main stablecoin, Zhao added. In this case, Binance could look to a non-USD backed alternative or find another issuer not regulated in the US.

“Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.”

BNB drops below $300

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At the time of writing, the price of BNB (BNB/USD) was around $291. Market sentiment is not helping the Binance coin price, with Bitcoin also in decline after retreating below $22,000 and Ethereum looking to revisit $1,400.

For BNB bulls, the struggle is to hold above $290, a key level for now given market reaction to latest crypto regulatory news has allowed bears to push below the psychologically important zone of $300.

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