According to a report from crypto news outlet The Block, crypto exchange Coinbase will end trading operations with the Binance-branded stablecoin, BUSD. The digital asset has come under scrutiny following the Securities and Exchange Commission’s (SEC) Wells Notice against the issuer, Paxos.
Coinbase Succumbs To Pressure?
As Bitcoinist has reported, Paxos has been accused by the SEC of allegedly violating investor protection laws when issuing Binance USD (BUSD). The Commission stated that BUSD, and many other tokens in the crypto ecosystem, are securities.
Therefore, Paxos must register the product with the SEC. This legal action from the US regulator forced the crypto company to cut ties with its long-term partner, the crypto exchange Binance, and stop issuing BUSD.
Coinbase has become the first crypto exchange to stop trading activities with this digital asset. According to The Block, starting March 13, 2023, users will not be able to 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 process. During our review of BUSD, we determined that BUSD no longer meets listing standards and will be suspended.
As the report confirmed, users can still withdraw funds in BUSD. Still, all commerce will be suspended on various Coinbase products, including, Advanced and Simple trading, Pro, Exchange, and Prime.
Will BUSD Suffer a Slow Death?
Coinbase is the first, but probably not the last, crypto trading platform to delist and stop trading Binance-branded digital assets. The CEO of crypto trading board Binance, Changpeng “CZ” Zhao, has predicted that the market cap of BUSD will “decline over time.”
This decrease in market capitalization can only lead to reduced use cases and the number of people using BUSD for regular trading activities. At the time, CZ stated the following about the fate of the BUSD and the implications for the crypto industry as the US launches an all-out crackdown on the fledgling sector:
“If” BUSD is ruled as a security by the courts, it will have a huge impact on how the crypto industry will develop (or not develop) in such jurisdictions. Binance will continue to support BUSD for the foreseeable future. We expect users to migrate to other stablecoins over time. And we will make product adjustments according to (…).