Brian Armstrong, the Chief Executive Officer (CEO) of American cryptocurrency exchange Coinbase has come out to announce the reason for delisting Binance USD (BUSD) some days earlier.
During an appearance, the crypto industry juggernaut explained that the decision was made due to the token’s liquidity concerns. Armstrong had earlier avoided going into further details after his company stated that BUSD no longer met its listing standards.
Coinbase concluded that the United States dollar-pegged stablecoin was no longer in sync with its listing standards after conducting some internal monitoring and review processes. The publicly traded company cited the recent troubles that Paxos, the issuer of the BUSD stablecoin has been faced with.
“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 citing the decree made by U.S. regulator, the Securities and Exchange Commission (SEC).
BUSD Security Status Troubles Regulators
U.S. watchdog SEC alleged that Paxos violated investors’ protection law by offering BUSB without registering the stablecoin as securities.
By mid-February when the SEC laid this claim, no official lawsuit or enforcement had been levied on Paxos but the idea was being considered. In response to the SEC’s claim, the blockchain infrastructure platform disagreed with the regulator that BUSD should be considered a security.
Shortly after, the New York Department of Financial Services (NYDFS) began to investigate Paxos. Along the line, some unresolved issues were spotted concerning Paxos’ connection to the leading digital asset trading platform Binance. This eventually led to the NYDFS ordering Paxos to suspend minting BUSD. The latter claimed to be suspending the minting because of NYDFS and not for the SEC.
Coinbase seems to be living up to the statement by Armstrong which cited that the exchange maintains a positive relationship with the SEC.
It is not known for certain if this is the same reason XRP was delisted from the exchange after the same U.S. regulator tagged it as an unregistered security. However, it is noteworthy that an XRP community member has insisted that the Ripple token be relisted in synchronization with the Coinbase grassroots campaign for crypto advocacy.