The supply level of United States dollar-pegged stablecoin BUSD has dipped below the $7 billion range to about $6.8 billion based on a statistical analysis published on Saturday. Notably, this is the lowest level it has fallen to since April 2021. Specifically, in the last 30 days, the volume of BUSD in circulation has reduced by 19.8%.
The unexpected activities of the last two months may have contributed to the downturn of the stablecoin.
In February, U.S. regulator New York State Department of Financial Services (NYDFS) began to look into the operations of BUSD issuer Paxos. During this time, the company announced that it had been directed by the NYDFS to suspend issuing BUSD.
SEC Issues Paxos a Wells Notice for BUSD
While that news was still brewing, the Securities and Exchange Commission (SEC) began to mull the idea of filing a lawsuit against Paxos and therefore, sent the firm a Wells Notice.
According to the U.S. regulator, Paxos had violated investor protection laws by offering BUSD which the SEC regards as unregistered securities. In response, Paxos blatantly disagreed with SEC that its coin qualifies as securities.
The BUSD issuer declared that its token was fully backed 1:1 by the U.S. dollar reserve. To further establish its stance on the non-securities status of BUSD, Paxos announced its readiness to go to court with the regulator if the need arises. At the same time, Paxos explained to its users that the Wells Notice did not affect other products and services but is only limited to BUSD.
Coinbase Delists BUSD Citing Liquidity Concerns
Many crypto exchanges became concerned about the series of problems hitting the New York-based financial institution.
Along the line, some of them delisted the stablecoin from their platforms citing liquidity concerns. American cryptocurrency exchange and publicly traded firm Coinbase wasted no time in delisting BUSD on the premise that it did not meet up with its listing standards.
“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,” Brian Armstrong, the Chief Executive Officer (CEO) of Coinbase said.
Binance U.S also suspended both deposits and withdrawal of the stablecoin, although it claimed that it was temporary.
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