Following the NYDFS order for Paxos to stop issuing BUSD tokens, a significant amount of the stablecoin was sold, and most of its liquidity flowed into USDT, a rival stablecoin. Reports suggest that $2.3 billion worth of BUSD was sold, as indicated by the cryptometer volume flow.
The New York Department of Financial Services (NYDFS) has ordered Paxos Trust Co., the issuer of Binance’s dollar-pegged cryptocurrency, to stop creating more BUSD tokens. However, Paxos will still manage redemptions of the stablecoin. The NYDFS and the U.S. Securities and Exchange Commission (SEC) are investigating Paxos, the issuer of Binance USD and Pax dollar (USDP).
Binance USD was the third-largest stablecoin by market cap, valued at approximately $16 billion on Monday. However, following the news of the NYDFS order, a significant amount of BUSD was sold, leading to a decrease in market cap. Despite this, the stablecoin was still trading near its $1 value on Monday. However, many whale traders are reportedly converting their BUSD into USDT.
Stablecoins have gained significant popularity in the crypto space due to their stable value and low volatility, making them a popular option for traders, investors, and businesses. Binance USD, also known as BUSD, was no exception. Launched through a white-label service offered by Paxos, BUSD quickly rose to become the third-largest stablecoin by market cap, valued at approximately $16 billion on Monday. However, the investigations by the NYDFS and the SEC add to the uncertainty, causing many to turn to USDT, a rival stablecoin.
