Exchange Stablecoin Wars Hot Up - Coinbase to Suspend BUSD Trading on March
Coinbase has announced the suspension of Binance USD (BUSD) trading, saying that the stablecoin does not meet its listing standards.
In a Monday announcement, the largest cryptocurrency exchange in the US said it will suspend trading for BUSD stablecoin starting March 13. The suspension affects Coinbase.com, Coinbase Pro, Coinbase Exchange, and Coinbase Prime, the platform added in another tweet.
"We regularly monitor the assets on our exchange to ensure they meet our listing standards. Based on our most recent reviews, Coinbase will suspend trading for Binance USD (BUSD) on March 13, 2023, on or around 12pm ET."
The move comes just two weeks after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD), to stop minting BUSD tokens. In a consumer alert, the DFS said it issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”
Subsequently, it was revealed that the SEC plans to sue the company over its BUSD issuance. The agency argued that BUSD is considered an unregistered security.
Following the regulatory clampdown, Paxos announced it would “end its relationship with Binance” and would stop issuing new BUSD tokens from February 21. However, the company will continue to support and redeem the tokens until at least February 2024.
As reported, Paxos CEO Charles Cascarilla revealed last week that the company is in talks with the SEC over its decision to consider the BUSD stablecoin a security, adding that they will continue the conversation in private.
“We are engaged in constructive discussions with the SEC, and we look forward to continuing that dialogue in private,” Cascarilla reportedly said, noting that the company is willing to defend its position that BUSD is not a security through litigation.
Binance is Looking Beyond Dollar-Pegged Stablecoins
Amid increasing regulatory scrutiny in the US, Binance has revealed that it is also looking beyond Paxos and dollar-based stablecoins.
Patrick Hillmann, Binance’s chief strategy officer, said in an interview last week that multiple private and public entities have shown interest in collaborating with the exchange on launching another stablecoin, one that might not be dollar-based.
"There are very interesting opportunities, particularly in Europe and the Middle East," Hillmann said in an interview with Forbes, without providing more details.
Prior to that, Binance CEO Changpeng Zhao also put forward the idea of the exchange issuing a non-dollar stablecoin. In a Twitter post, CZ said the company is exploring other issuers and non-USD-based stablecoins.
Aside from the saga around its stablecoin, Binance has been facing increasing difficulty in the U.S. on a number of other fronts, too. Last month, the exchange's banking partner Signature Bank raised transaction minimums for dollar transfers, announcing that it would only process trades by users with USD bank accounts over $100,000.
The exchange also announced that it is temporarily suspending U.S. dollar withdrawals and deposits for international customers earlier this month.