The Binance USD (BUSD) stablecoin is returning to its intended $1 peg after a brief depegging earlier this week. The third-largest stablecoin by market cap, BUSD is backed by short-term treasuries and cash-like assets and is issued by Paxos Trust Co. On Monday, the New York Department of Financial Services (NYDFS) ordered Paxos to stop minting more of the tokens, causing BUSD to drop to a two-year low of $0.9950.
However, BUSD is gradually regaining its peg, likely due to comments from Binance CEO Changpeng Zhao on Tuesday. During a Twitter Spaces, Zhao clarified that BUSD is not issued by Binance, but rather that the exchange has an agreement to let Paxos use its brand. This improved sentiment for the tokens among traders, as some crypto enthusiasts on Twitter pointed out earlier this week.
In addition, Paxos has already burned more than $700 million of BUSD tokens since Monday. Zhao also noted that Binance will continue to work with more stablecoin issuers or creators, citing existing support for other stablecoins such as USD coin (USDC) and tether (USDT).
Overall, BUSD is returning to its intended $1 peg after a brief depegging earlier this week. This is likely due to comments from Binance CEO Changpeng Zhao and the burning of more than $700 million of BUSD tokens by Paxos. Binance will also continue to work with more stablecoin issuers or creators, providing more options for traders.