- Paxos says BUSD is not a security under federal securities laws
- BUSD token minting will stop on February 21
Paxos Trust Company was ordered to stop issuing the stablecoin Binance USD (BUSD) by the New York Department of Financial Services (NYDFS) on February 13 on the grounds of it being a security.
The company expressed strong disagreement with state and federal watchdogs. It intends to “engage” with the US Securities and Exchange Commission (SEC) on the issue and is ready to “litigate vigorously”, CoinTelegraph reported.
Categoric disagreement with the order
Paxos issued a statement yesterday, confirming reports that they had gotten a Wells notice from the SEC over the stablecoin and their purported failure to register it as a security. The statement clarified:
Paxos categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws. We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary.
Paxos will stop minting BUSD in a week
The company denied further allegations and admitted they had received the notice 10 days ago. They intend to comply with the regulator’s order, and BUSD token minting will stop on February 21. Paxos assured clients that BUSD would remain redeemable and supported until at least February next year.
BUSD tokens can be redeemed in USD or Pax Dollars
Current and new Paxos customers will be able to convert BUSD to US dollars and withdraw the funds or to Pax Dollar (USDP). Paxos issues this regulated stablecoin, which is backed by US dollars.
Circle filed a complaint with the NYDFS
Reportedly, the NYDFS received a complaint from Paxos competitor Circle about cryptocurrency exchange Binance’s reserves before the regulator decided to crack down on BUSD.
CEO Changpeng Zhao assured that his exchange would keep supporting BUSD regardless of the fact that regulators ordered Paxos to stop minting it.
