The third largest stablecoin Binance USD (BUSD) is on the way to collapse as the New York Department of Financial Services ordered Paxos Trust Company to stop minting BUSD tokens. Paxos has agreed to halt minnting from feb 21. As result of this the value of BUSD has depegged from the dollar.
This phenomenon kept down the seventh-largest cryptocurrency and third largest stablecoin price as per CoinMarketCap. At the time, BUSD, the stablecoin of Binance, depegged from $1.
Binance CEO, CZ said that NYDFS regulates the Paxos and due to the shutdown of BUSD minting, the market cap of BUSD “will only decrease over time.”
Paxos is also believed to terminate its partnership with Binance while ensuring BUSD shareholders that each currency would be linked 1:1 to the US dollar—a reserve backs the denomination.
Also Read: PAXOS to Cease Issuance of BUSD Tokens
BUSD is constantly hovering below $1 since Monday morning. Emerging volatility in stablecoin displays regulatory action’s bad impact, which might pressure the fourth largest crypto- Binance.
As a result of the depeg of BUSD The value of Binance Coin (BNB), the native token of Binance’s exchange, has dropped roughly 7.5%.
