Nasdaq-listed crypto exchange operator Coinbase plans to cease support for trading Binance-branded token BUSD, the world’s third largest stablecoin, starting in two weeks.
In a pair of tweets, the exchange said the suspension is scheduled for March 13 and will affect Coinbase.com, Coinbase Pro, Coinbase Exchange, and Coinbase Prime platforms. However, the token holders will still be able to access their BUSDs and withdraw them at any time.
Coinbase tweeted that “Our determination to suspend trading for BUSD is based on our own internal monitoring and review processes. When reviewing BUSD, we determined that it no longer met our listing standards and will be suspended.”
Binance, the world’s largest cryptocurrency exchange by trading volumes, launched its native stablecoin back in 2019. BUSD was built in association with US-based Paxos, which serves as its issuer as well as custodian of fiat reserves. Since then, the $16 billion stablecoin has been up for direct purchase and redemption on the Paxos platform, as well as for trading on Binance.com and other exchanges.
We regularly monitor the assets on our exchange to ensure they meet our listing standards. Based on our most recent reviews, Coinbase will suspend trading for Binance USD (BUSD) on March 13, 2023, on or around 12pm ET.
— Coinbase Assets (@CoinbaseAssets) February 27, 2023
The development comes shortly after the New York Department of Financial Services (NYDFS) ordered Paxos Trust Co., which has its own stablecoin, Pax dollar (USDP), to stop minting any new BUSDs. To assure holders, Binance said that Paxos will continue to manage redemptions of BUSDs.
The SEC also plans to sue Paxos for violating investor protection rules. The issuer was already told of the planned enforcement action as the regulator claims that Binance USD is an unregistered security.
Pasox has refuted the SEC’s claims and noted that it” categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws.” The company added that the SEC Wells notice pertains only to BUSD and there are no other allegations against its business.
Although the issuer said it will contest the regulatory claims, the legal battle with the SEC could take years if the company fights the order in court. As such, those who keep BUSD listed on their platforms may be at risk of being sued and fined if the SEC wins its case and the court deems the stablecoin unregistered securities.