Brian Armstrong explained that the low liquidity of BUSD stablecoin was a very big concern for Coinbase customers.
Coinbase is a Nasdaq-listed public crypto exchange. In the US, Coinbase is a top-ranked exchange and this exchange is known to follow regulatory guidelines strongly. The services of this exchange are available for retail, as well as institutional investors, and also some secret US agencies use its blockchain tools to trace bad actors in the crypto sector.
Just a few days ago, the Coinbase exchange announced that Binance stablecoin (BUSD) failed to meet the assets listing standard of the Coinbase exchange, so the exchange decided to delist BUSD stablecoin from all of its services by 15 March.
At that time, the Coinbase team failed to explain the core reason that forced Coinbase to suspend support for BUSD stablecoin. But recently Coinbase CEO Brian Armstrong appeared in an interview with Bloomberg TV and there he revealed that BUSD liquidity was the main concern for the exchange.
Armstrong said that as BUSD issuer Paxos trust was ordered by the New York watchdog to stop minting of BUSD stablecoin, so BUSD traders on the Coinbase exchange were at risk because of low liquidity issues.
“The reason we did that was that Paxos, the issuer of BUSD, had been ordered to stop minting it, so we were concerned about liquidity issues for our customers,” Armstrong said.
BUSD, Paxos & legal hurdles
On 13 Feb 2023, The United States Securities and Exchange Commission (SEC) sent a Wells notice to the BUSD stablecoin issuer Paxos company and claimed that BUSD was a security under its review.
Later, Paxos received an order from the New York Department of Financial Services (NYDFS) to stop issuing new BUSD stablecoins in the crypto industry.
Now, Paxos is in talks with the SEC agency to solve this matter and also Paxos terminated its partnership with Binance exchange.