Binance CEO Changpeng Zhao has distanced himself from the Binance-branded stablecoin BUSD after U.S. regulatory action caused minting to cease. On Monday, BUSD issuer Paxos said it would stop minting new tokens following a request from the New York Department of Financial Services (NYDFS), but denied regulators’ claims the cryptocurrency, pegged to the value of the U.S. dollar, constituted an unregistered security.
In a Twitter Spaces on Tuesday, Zhao clarified that BUSD was not issued by Binance, but rather that the company had an agreement to let Paxos use its brand. He also said that Binance would continue to work with other stablecoin issuers, such as USD coin (USDC) and tether (USDT).
Zhao also addressed claims reported by Bloomberg that rival stablecoin issuer Circle had sounded the alarm with NYDFS over concerns that Binance did not have enough reserves to back up BUSD tokens. He said he did not believe Circle would do something like that, as it would hurt the overall industry.
The news of BUSD’s suspension has caused some concern in the cryptocurrency industry, as it highlights the potential risks of regulatory action. However, Paxos has said it will litigate if necessary to prove that BUSD is not a security. It remains to be seen how the situation will play out, but it is clear that Binance is taking a cautious approach to the matter.