• Paxos, the issuer of Binance USD (BUSD), has burned more than $700 million worth of BUSD tokens since Monday.
• The burn was due to mounting regulatory pressure from the U.S. Securities and Exchange Commission and the New York Department of Financial Services.
• This represents 6% of the total BUSD in circulation, as its market capitalization is expected to decrease over time.
Stablecoin Issuer Paxos Burns $700M Binance USD
Paxos, the issuer of the $16 billion Binance USD (BUSD) stablecoin, has burned more than $700 million worth of BUSD tokens since Monday amid mounting regulatory pressure from the U.S. Securities and Exchange Commission (SEC) and New York Department of Financial Services (DFS). This represents some 6% of the total coins in circulation as its market capitalization is expected to decrease over time.
Burn Is Due To Regulatory Pressure
The burn started less than two hours after an announcement on Monday that Paxos would stop issuing the cryptocurrency due to regulatory pressures by both SEC and DFS, according to blockchain data from Nansen. Transactions totaling $703 million worth were transferred from a Paxos Treasury crypto wallet to a burn address within 27 hours starting Monday morning, essentially removing them from circulation.
BUSD Backed By Short-term Treasuries And Cash-like Assets
BUSD is a dollar-pegged stablecoin backed by short-term treasuries and cash-like assets so holders can redeem it 1:1 for a U.S Dollar anytime according to regulation from DFS – New York’s main financial regulator. Changpeng Zhao, chief executive of Binance – world’s largest crypto exchange by trading volume – tweeted that the market capitalization “will only decrease over time.”
Wells Notice Sent By SEC To Firm For Unregistered Securities
News broke on Monday morning that SEC had sent a Wells notice to Paxos as they were issuing unregistered securities, signaling an imminent enforcement action from regulator which triggered this move by firm itself pre-emptively reducing coin supply in order stay compliant with rules & regulations set forth in their license agreement with DFS .
Paxos Stops Issuing Cryptocurrency Amid Regulatory Pressure
The maneuver is a sign that investors are exiting quickly as redemption at this scale happened within 27 hours since announcement was made on Monday morning making it one of quickest such exits seen recently across crypto markets