The New York Department of Financial Services (NYDFS) has accused Paxos, a cryptocurrency firm, of not administering Binance USD (BUSD) in a safe and sound manner. According to the regulator, Paxos failed to establish and maintain effective controls to ensure the safety and soundness of the stablecoin.
The NYDFS has issued a cease and desist order against Paxos, stating that the firm cannot issue or administer BUSD until it has taken the necessary steps to address the issues identified by the regulator. Paxos has been given 30 days to respond to the order and take action to correct the issues.
This move by the NYDFS has sparked concern among the cryptocurrency community, as it raises questions about the safety and stability of stablecoins, which are designed to maintain a stable value and reduce the volatility of other cryptocurrencies. BUSD is pegged to the value of the U.S. dollar and is used by many as a more stable alternative to other cryptocurrencies.
The NYDFS has emphasized that this action does not reflect a broader stance on the cryptocurrency industry, but rather a specific issue with Paxos and its administration of BUSD. However, it is clear that regulators are becoming increasingly active in their oversight of the crypto space, and companies operating in this industry must be prepared to comply with regulations in order to maintain their operations.
Paxos has stated that it is “disappointed” with the NYDFS’ decision and intends to “vigorously defend” itself against the charges. The outcome of this case could have far-reaching implications for the stablecoin industry and could shape the future of regulation in the cryptocurrency space.