The post Binance USD (BUSD) Stabilizes at $1 After CEO Clarifies Connection to Paxos-Issued Token appeared first on Coinpedia Fintech News
The Binance USD (BUSD), the third-largest stablecoin by market cap, is returning to its intended $1 peg after Binance CEO Changpeng Zhao commented on the crypto exchange’s connection to the popular Paxos Trust Co.-issued token on Tuesday.
BUSD is a stablecoin backed by short-term treasuries and cash-like assets. It rallied to $0.9997 in European morning hours on Wednesday, recovering from a two-year low of $0.9950 hit after the New York Department of Financial Services (NYDFS) on Monday ordered Paxos to stop minting more of the tokens.
During a Twitter Spaces session on Tuesday, Zhao clarified that Binance does not issue BUSD. “We have an agreement to let them [Paxos] use our brand, but that’s not something we created,” he said.
Zhao’s comments likely improved sentiment among traders, with some crypto enthusiasts on Twitter pointing this out earlier this week. Paxos has already burned more than $700 million of BUSD tokens since Monday.
“Paxos will continue to service the product, and manage redemptions,” Zhao added. “Paxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves already audited many times by various audit firms.”
However, the regulatory pressure could impact BUSD’s market cap, which will decrease over time. If BUSD is ruled as a security by the courts, it will significantly impact the development of the crypto industry in jurisdictions where it is ruled as such.
Despite the ongoing regulatory uncertainty in certain markets, Binance will continue to support BUSD for the foreseeable future. However, Zhao also said that the company foresees users migrating to other stablecoins over time and that product adjustments will be made accordingly.
“We will be reviewing other projects in those jurisdictions to ensure our users are insulated from undue harm,” he said.
As of now, BUSD is still trading at $1, in line with its intended peg.