For those still holding on to Binance USD tokens, this may come as a shock: Coinbase, the world’s leading cryptocurrency exchange, is set to suspend trading of BUSD beginning March 13, 2023 at around noon, EST. The announcement was made on Monday, February 27th, following an internal review at the exchange.
The announcement comes in the wake of financial technology (fintech) firm Paxos Trust’s announcement that it will no longer be minting BUSD tokens due to pressure from regulatory bodies.
According to a statement from a Coinbase spokesperson, the exchange has opted to suspend BUSD based on the findings of its own recent internal review. The spokesperson added that, following a review of BUSD’s performance on the exchange, the token no longer met its listing standards, hence the suspension.
Paxos Closes the Door on BUSD
In early February, the Paxos Trust declared the end of its relationship with Binance. The announcement was made prior to a lawsuit filed by the US Securities and Exchange Commission (SEC) against the former for issuing BUSD tokens which were specifically created to track the price of the US dollar through financial reserves. According to related documents, the SEC filed the suit against Paxos as it violated a number of investor protection laws.
The Paxos Trust has been minting BUSD since it was launched in 2019. At the time, the company entered a licensing agreement with Binance which was, at the time, the largest cryptocurrency exchange by volume. Coinbase, however, only listed BUSD on its platform in April 2022.
An Expert Weight In
In his opinion, Blockchain Intelligence Group’s director of regulatory affairs Timothy Cradle opines that Coinbase was protecting its own interests when it decided to suspend BUSD trading. By doing so, Coinbase will be able to avoid regulatory scrutiny that could implicate the exchange in the sale of unregulated securities.
Cradle added that this series of events may end in a settlement, along with permanent cease and desist orders. In this case, the Paxos Trust will need to formally register with SEC if it plans to relaunch the token in the future.
Several crypto exchanges resorted to similar measures back in 2020 when Ripple Labs came under fire with SEC for raising around $1.3 billion in unregistered securities by way of the XRP token. This resulted in the suspension of XRP trading on a number of platforms, including Coinbase, following the filing of the lawsuit.
The dispute between SEC and Ripple Labs remains unresolved for now.