Reportedly BUSD stablecoin was trading at around 80 cents on 22 Feb 2023 amid decreasing supply of BUSD stablecoin in the crypto market.
Binance stablecoin (BUSD) is US dollar-pegged stablecoin by the New York-registered company Paxos Trust. Paxos provides BUSD stablecoin on behalf of “Binance”. Binance doesn’t manage or own anything in BUSD stablecoin but Paxos promotes Binance crypto exchange with BUSD Stablecoin as a part of their friendly partnership. 10 days ago, Paxos stopped minting new BUSD stablecoin, on behalf of an order from the New York regulatory body.
On 22 Feb 2023, In early morning BUSD stablecoin plunged by 20 cents against Dai stablecoin but that situation was only for a small time period because the whole matter dragged Binance team’s attention suddenly & they fixed the whole situation with the introduction of more Dai liquidity.
Indeed, a single sell trade worth $647,000 promoted this issue, which means there was less than Dai liquidity over BUSD on the platform. It was only for a short time because Binance’s team took action on time to handle depeg event.
BUSD, legal hurdles & panic
10 days ago, the United States Securities and Exchange Commission (SEC) sent a Wells notice to the Paxos company and claimed that BUSD was a security under the Howey test.
New York’s financial regulatory body NYDFS also ordered it to stop providing Busd stablecoin services to the Binance exchange citing multiple unresolved relationships with Binance.
Reportedly Paxos is in constructive talks with the US SEC agency over the nature of BUSD stablecoin.
Over the last few days, many reports claimed that BUSD stablecoin users may feel panic sell pressure in the crypto sector because of these regulatory pressures on multiple crypto companies.