BUSD Words from Zhao: “We Will Continue to Support”

After the New York Department of Financial Services requested Paxos to cease production of BUSD, Binance CEO Changpeng Zhao unveiled a short-term roadmap. Stating that the real owner of BUSD is Paxos, CZ said that all funds are safe and they will continue to support BUSD for a while.

#BUSD. A thread. 1/8

In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
— CZ 🔶 Binance (@cz_binance) February 13, 2023

Here are CZ’s tweets:

“In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!

We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS). Paxos is regulated by NYDFS. BUSD is a stablecoin wholly owned and managed by Paxos.

As a result, BUSD market cap will only decrease over time.

Paxos will continue to service the product, and manage redemptions. Paxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.

On the alleged SEC vs Paxos lawsuit, I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos. I am not an expert on US laws. But personally, I agree with Mile’s logic here (not that it means much):

The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos.

But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria.

No one has ever had “the expectation of profit” when buying $BUSD. pic.twitter.com/QXOlDUyvc3
— Miles Deutscher (@milesdeutscher) February 13, 2023

“IF” BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.

Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.

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.”