Coinbase CEO Brian Armstrong has explained the delisting of Binance USD (BUSD) from the exchange, citing liquidity concerns as the reason behind the move.
In a recent appearance on Bloomberg TV, Armstrong noted that the decision was connected to regulatory concerns surrounding the stablecoin’s issuer, Paxos, which had been ordered by the New York Department of Financial Services (NYDFS) to stop minting the token due to issues with its relationship with Binance.
As a result, Coinbase was worried about liquidity issues for its customers and decided to suspend BUSD trading on its platform.
“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 said to Bloomberg.
Coinbase CEO Brian Armstrong spoke with @SonaliBasak about working with US regulators and the SEC, along with the need for clearer rules on crypto.
More from his interview here: https://t.co/6fCuJvNKJN pic.twitter.com/yeHiq9eLgz
— SwissTrading (@swisstradingnet) March 2, 2023
This move came after Coinbase had previously cited the stablecoin’s failure to meet listing standards as the reason for its suspension.
However, Brian Armstrong’s comments shed light on the deeper concerns that the exchange had regarding BUSD’s liquidity.
Prior to the delisting, Paxos had been managing and minting the stablecoin, which had been listed on Binance despite not being issued by the exchange.
The regulatory issues surrounding BUSD had caused many crypto users to switch to other stablecoins, with Tether gaining a significant share of the market as a result.
‘Constructive Discussions’ with the SEC
Meanwhile, the wider crypto community is speculating on what the future holds for stablecoins in the face of increased regulatory scrutiny.
Some predict a shift towards other centralized stablecoins, while others anticipate the rise of algorithmic stablecoins.
The Paxos-Binance controversy is just one example of the SEC’s wider crackdown on the crypto industry. In addition to targeting unregistered securities like BUSD, the regulator has charged individuals and companies with fraud and imposed fines on celebrities for crypto endorsements.
Despite this, Brian Armstrong has maintained that Coinbase maintains a positive relationship with the SEC.
As for Paxos, the company has reportedly entered “constructive discussions” with the SEC and has ended its relationship with Binance.
However, the fallout from the regulatory issues surrounding BUSD and other stablecoins is likely to continue to reverberate throughout the crypto industry, with exchanges and issuers alike facing increased scrutiny from regulators.
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