Recent headlines have been dominated by information about increased government regulation of the cryptocurrency business. With the government cracking down more on the cryptocurrency business, some crypto companies are now being looked at by law authorities. One of the most recent ones is the New York Department of Financial Services investigation into Paxos Trust Co., which led to the suspension of the distribution of Binance Tokens, one of the biggest currencies linked to the dollar.
The NYDFS has instructed Paxos to stop creating additional Binance’s BUSD tokens, although they will still be responsible for monitoring product redemptions through their separate blockchain infrastructure platforms. The most recent statement made public by Binance contains an official announcement of this information.
According to Gary Gensler, the head of the SEC, Paxos will stop creating new Binance tokens. In which the chief reportedly declared that the agency will focus on stepping up its oversight of the betting sector. Investors that have their particular assets held on centralized staking platforms have expressed “alarm” in response to the aforementioned revelation.
These circumstances have also caused the participants in the cryptocurrency business to doubt the industry’s viability, given that the next regulatory actions are still unclear and full of uncertainty. Although many market participants continue to be upbeat about the part that the cryptocurrency business plays and will play in the future of the financial environment, despite the aforementioned uncertainties. Some even asserted that the current crackdown is intended to long-term boost the sector.
Binance Token Falls
The Binance coin, or BNB, was seen to have fallen 5% in response to the order from the New York Department of Financial Services directed at Paxos. It is well known that BUSD is a stablecoin backed by the dollar. It made its public debut in 2019 as a result of a collaboration between the cryptocurrency exchange Binance and the blockchain startup Paxos Trust, which received endorsement from the New York Department of Financial Services.
Since that time, the BNB coin has served as the exchange’s native token. A representative for Binance confirmed through email that Paxos had informed them of the NYDFS’ directive. Then, Binance stated that Paxos “wholly owns and manages” BUSD, a stablecoin.
Binance continued by saying that they already anticipate a decline in the market capitalization of BUSD over the coming days and hours. The relevant cryptocurrency exchange platform has also confirmed that Paxos will keep supporting the product, oversee redemptions, and follow up with more details if needed. A guarantee that Paxos has the user’s funds safe and fully guaranteed by reserves in their banks was included in the official statement’s conclusion.