BUSD Stabilizes at $1 After CEO Clarifies Connection to Paxos Token

/ Allgemein / Von

Overview of Binance USD (BUSD)

  • Binance USD (BUSD) is a stablecoin backed by short-term treasuries and cash-like assets.
  • It rallied to $0.9997 in European morning hours on Wednesday, recovering from a two-year low of $0.9950 hit after the New York Department of Financial Services (NYDFS) on Monday ordered Paxos to stop minting more of the tokens.
  • Paxos has already burned more than $700 million of BUSD tokens since Monday.

Connection between Binance and Paxos

Binance CEO Changpeng Zhao clarified that Binance does not issue BUSD, but rather has an agreement to let Paxos use their brand. He also mentioned that the funds are #SAFU and fully covered by reserves in their banks, with their reserves already audited many times by various audit firms.

Regulatory Pressure on BUSD

The regulatory pressure could impact BUSD’s market cap, which will decrease over time. If it ends up being ruled as a security by the courts, it would significantly affect the crypto industry in certain jurisdictions. However, despite this uncertainty, Changpeng Zhao assured users that they will continue to support BUSD for now and be reviewing other projects in those jurisdictions to ensure user’s safety if needed.

Future Outlook for BUSD

Changpeng Zhao foresees users migrating to other stablecoins over time and that product adjustments will be made accordingly. Despite this prediction, he also reassured users that they will still continue to support the token for now.

Conclusion

In conclusion, despite some regulatory turbulence around the token lately due to its connection with Paxos Trust Co., it looks like traders have regained confidence about its value stabilizing at its intended $1 peg after Changpeng Zhao’s comment about not issuing it themselves but merely letting Paxos use their brand name instead. This reassurance was enough for traders who saw an opportunity to buy back into it at reduced prices due to its temporary dip in value over the past couple days following NYDFS’ announcement earlier this week.