Binance USD (BUSD) Stabilizes at $1 After CEO Clarifies Connection
Binance USD (BUSD) Stabilizes at $1
- Binance CEO Changpeng Zhao clarified the connection between BUSD and the Paxos Trust Co.-issued token.
- Paxos has already burned over $700 million of BUSD tokens since Monday.
- The crypto exchange will continue to support BUSD for the foreseeable future.
Background of BUSD’s Stability
Binance USD (BUSD), a stablecoin backed by short-term treasuries and cash-like assets, is returning to its intended $1 peg after Binance CEO Changpeng Zhao commented on the crypto exchange’s connection to the popular Paxos Trust Co.-issued token on Tuesday. After rallying to $0.9997 in European morning hours on Wednesday, it recovered from a two-year low of $0.9950 hit after the New York Department of Financial Services (NYDFS) on Monday ordered Paxos to stop minting more of the tokens.
Clarification by Changpeng Zhao
During a Twitter Spaces session on Tuesday, Zhao clarified that Binance does not issue BUSD. „We have an agreement to let them [Paxos] use our brand, but that’s not something we created,“ he said. His comments likely improved sentiment among traders, with some crypto enthusiasts on Twitter pointing this out earlier this week. Paxos has already burned more than $700 million of BUSD tokens since Monday.“Paxos will continue to service the product, and manage redemptions,“ Zhao added. „Paxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves already audited many times by various audit firms.“
Regulatory Pressure Impacting Market Cap
Despite the ongoing regulatory uncertainty in certain markets, regulatory pressure could still impact BUSD’s market cap, which would decrease over time if it is ruled as a security by courts – thus significantly impacting development of the crypto industry in jurisdictions where it is ruled as such.
Foreseeable Future Support for BUSDDespite these implications, however, Binance will continue to support BUSD for the foreseeable future; recognizing users might migrate to other stablecoins over time causing necessary product adjustments accordingly. „We will be reviewing other projects in those jurisdictions to ensure our users are insulated from undue harm,“ said Zhao..
< h2 >Conclusion h2 > As of now, BUSD is still traded on numerous exchanges including Coinbase Pro and Kraken and has stabilized at its intended $1 peg following comments from Changpeng Zhao clarifying its connection with Paxos Trust Co.- issued token. The regulatory pressure could still impact market cap but nonetheless ,the crypto exchange will continue supporting it for now .