Coinbase has suspended Binance Dollar (BUSD) trading as planned, banning stablecoin trading starting Monday.
“We have banned Binance USD (BUSD) trading,” the U.S.-based cryptocurrency exchange said in a March 13 tweet, adding that users will continue to have access to their BUSD funds and be able to withdraw them at any time these funds.
The exchange initially revealed plans to suspend BUSD trading late last month, citing “listing criteria” as the reasoning behind the decision. The suspension affects Coinbase.com, Coinbase Pro, Coinbase Exchange, and Coinbase Prime.
The move comes after the New York Department of Financial Services (DFS) ordered Paxos, the cryptocurrency firm that issues Binance stablecoin Binance USD (BUSD), to stop minting BUSD tokens. In a consumer alert, DFS said it issued the order “due to several unresolved issues related to Paxos’ oversight of its relationship with Binance.”
Subsequently, it was revealed that the SEC had issued a Wells Notice to Paxos and planned to sue the company over its BUSD issuance. The agency argued that BUSD is considered an unregistered security.
Following the regulatory crackdown, Paxos announced that it would “terminate its relationship with Binance” and would stop issuing new BUSD tokens starting Feb. 21. However, the company will continue to support and redeem the tokens until at least February 2024.
The BUSD market capitalization has been trending down for the past few weeks due to the lack of new token issuance. BUSD’s market capitalization has fallen to around $8.4 billion from around $16.5 billion earlier this year, according to CoinMarkeCap.
Meanwhile, in terms of price stability, BUSD has been able to maintain its peg to the U.S. dollar despite recent pressure.
USDC loses touch amid US banking crisis
Over the weekend, USDC, the regulated stablecoin issued by Circle, was no longer pegged to the U.S. dollar after it was revealed that its reserves of more than $3 billion were deposited in an account with failed lender Silicon Valley Bank.
The stablecoin fell to an all-time low around $0.8774 on Saturday amid rising uncertainty. However, it began to recover after Circle pledged that it would cover any shortfall in its stablecoin reserves if it did not receive the full $3.3 billion held by SVB.
In addition, US regulators approved plans to support savers and financial institutions linked to parent company SVB. Depositors at SVB and Signature Bank, which was closed on Sunday amid similar systemic contagion concerns, will be able to fully withdraw their deposits as part of a number of moves officials approved over the weekend.
As of now, USDC is trading at $0.999, almost around its expected price of $1. Notably, stablecoins have seen massive redemptions over the past few days, losing over $3 billion in market cap amid the saga surrounding Bank of America.
Source of information: Compiled from CRYPTONEWS by 0x Information.Copyright belongs to the author, without permission, may not be reproduced