• Binance USD (BUSD) has stabilized at its intended $1 peg after CEO Changpeng Zhao clarified the connection to Paxos-issued token.
• Paxos has burned over $700 million of BUSD tokens since Monday, and is now being serviced by them.
• Despite regulatory pressure, Binance will continue to support BUSD for the foreseeable future.
Binance USD Stabilizes After CEO Clarifies Connection to Paxos
Binance USD (BUSD), the third-largest stablecoin by market cap, has returned to its intended $1 peg after Binance CEO Changpeng Zhao commented on the crypto exchange’s connection to the popular Paxos Trust Co.-issued token on Tuesday. The recovery was aided by Zhao clarifying that Binance does not issue BUSD, but rather has an agreement with Paxos allowing them to use their brand name. Since Monday, Paxos has already burned more than $700 million of BUSD tokens.
Paxos Services & Manages Redemptions
During a Twitter Spaces session on Tuesday, Zhao also confirmed that while they allow Paxos to use their brand name, they are not issuing the token themselves. He assured users that all funds are safe and fully covered by reserves in banks owned by Paxos who have been audited many times by various audit firms. Furthermore, he stated that „Paxos will continue to service and manage redemptions.“
Regulatory Pressure Could Impact Market Cap
The regulatory pressure could impact BUSD’s market cap in certain jurisdictions where it is ruled as a security which could significantly impact the development of the crypto industry there. Despite this uncertainty though, Zhao stated that they will be reviewing other projects in these areas so users are insulated from any harm caused by regulations.
Product Adjustments Will Be Made Accordingly
Zhao also said that although they are currently supporting BUSD for now, they foresee users migrating to other stablecoins over time and so product adjustments will be made accordingly.
Overall, despite some regulatory pressure impacting certain markets where it is ruled as a security, Binance will still support and maintain its relationship with Paxos regarding their issuance of the stablecoin known as BUSD for now but may adjust products accordingly if needed in light of user migration towards other options over time