Per a report from crypto news outlet The Block, crypto exchange Coinbase will halt trading operations with the Binance-branded stablecoin, BUSD. The digital asset has been heavily scrutinized following the Securities and Exchange Commission (SEC) Wells Notice against its issuer, Paxos.
Coinbase Succumbs To The Pressure?
As Bitcoinist has been reporting, Paxos was accused by the SEC of allegedly violating investor protection laws when issuing Binance USD (BUSD). The Commission claims that BUSD, and many other tokens in the crypto ecosystem, is a security.
Therefore, Paxos allegedly needed to register the product with the SEC. This legal action from the U.S. regulator forced the crypto firm to cut ties with its long-term partner, crypto exchange Binance, and to stop issuing BUSD.
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Coinbase has become the first crypto exchange that will stop trading activity with this digital asset. According to The Block, starting March 13, 2023, users cannot buy or sell cryptocurrencies in exchange for the Binance-branded stablecoin.
A Coinbase spokesperson told The Block:
Our determination to suspend trading for BUSD is based on our own internal monitoring and review processes. When reviewing BUSD, we determined that it no longer met our listing standards and will be suspended.
As the report confirmed, users can still withdraw their funds in BUSD. Still, all commerce will be suspended across the multiple Coinbase products, including, Advanced and Simple trading, Pro, Exchange, and Prime.
BUSD Will Suffer Slow Death?
Coinbase is the first, but might not be, the last crypto trading platform to de-list and halt commerce with the Binance-branded digital asset. The CEO of crypto trading venue Binance, Changpeng “CZ” Zhao, already predicted that BUSD’s market cap will “decrease over time.”
“IF” BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such. Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly (…).
This drop in market capitalization can only lead to decreased use cases and the number of people using BUSD for regular trading activities. At the time, CZ stated the following on BUSD’s fate and the implications for the crypto industry as the U.S. launches an all-out crackdown on the nascent sector:
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