Coinbase will suspend trading on Binance USD (BUSD) starting March 13
The popular American cryptocurrency exchange has announced that it intends to stop supporting the stablecoin recently attacked by the SEC.
The U.S. Securities and Exchange Commission (SEC) sent a notice earlier this year to Paxos, the issuer of Binance USD (BUSD), stating that the stablecoin is a security and should be registered under applicable federal regulations. Citing "listing standards", Binance's competitor Coinbase announced that it would stop servicing BUSD from March 13 this year.
Coinbase will suspend BUSD trading
A well-known cryptocurrency exchange run by Brian Armstrong has published an announcement addressed to its clients, in which it announced that it will soon stop supporting trading in the BUSD stablecoin.
Coinbase's official Twitter profile states that the determination to stop supporting Binance's "stable" cryptocurrency is based on internal processes related to the monitoring and review of virtual currencies.
“During the review of BUSD, we collectively concluded that it no longer meets our listing standards and will therefore be suspended,” a Coinbase spokesperson explained.
According to a statement on the official website of the exchange, it conducts a rigorous verification process of cryptocurrency assets, evaluating them in terms of legality, compliance, as well as technical security standards.
BUSD is scheduled to be delisted on Coinbase on March 13, 2023. While trading will remain disabled, investors will be able to withdraw their coins to external crypto addresses at any time.
The SEC recognized BUSD as a security
Some time ago, Paxos confirmed reports that it had received a notification from the US financial regulator. It turns out that the SEC claims that BUSD is a security, and the company issuing it is breaking the law because it has not registered it in accordance with federal regulations.
Subsequently, the New York State Department of Financial Services ordered Paxos to stop minting new BUSD coins. The issuer of this stablecoin complied with this call. As a consequence, in the face of regulatory uncertainty, investors began to shift their capital from this “stable” cryptocurrency to other assets, which caused its capitalization to drop by $2 billion in just a few days.
Paxos issuing BUSD in partnership with Binance disagrees with the SEC's claim. The company recently announced that it is currently in constructive talks with the US regulator. Coinbase, on the other hand, emphasized that it had no knowledge of what aspects of BUSD could be investigated by the SEC, but personally claimed that stablecoins are certainly not securities.
Both Binance and Paxos have reassured investors that BUSD is fully backed by reserves.