Investors pull $2.5 Bn from Binance stablecoin over regulatory scrutiny from NYSDFS

As reported by Reuters, On Monday, Paxos, a U.S. financial technology company that issues Binance USD, Binance’s dollar-pegged stablecoin said it would end its relationship with the exchange after an order from the New York State Department of Financial Services (NYSDFS) to stop issuing BUSD.

Paxos will not be creating any new BUSD tokens, effectively stunting the stablecoin’s ability to grow and calling its future into question. Binance has said that since Paxos manages the token, its market capitalization would only shrink over time.

About $2.5 billion flowed out from Binance’s stablecoin this week, Binance’s CEO said on Twitter, after U.S. regulators turned their sights on the cryptocurrency.

Most of the money has moved from Binance USD into Tether, another so-called stablecoin where tokens have a $1 value, Binance boss Changpeng Zhao said on Twitter. “Landscape is shifting,” he said in a tweet,

Stablecoins are used for trading between crypto tokens and between crypto and traditional assets. Binance USD is the third-biggest stablecoin behind Tether and USD Coin.

Tether’s market capitalization – a measure of the amount of money held in Tether – is up about $2 billion this week according to analytics site coinmarketcap.com.

Binance’s native token, Binance Coin, fell on the news but has since recovered and was last steady at $306.96.

As reported by Reuters on Thursday, Binance had secret access to a bank account belonging to its purportedly independent U.S. partner and transferred $400 million to a trading firm managed by Zhao.

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