Paxos Burns Over $700 Million BUSD After 27 Hours Amid Legal Pressure

Key Points:

• Stablecoin issuer Paxos has burned more than $700 million in BUSD tokens since Monday.
• Paxos announced that it would stop issuing cryptocurrencies amid increased regulatory pressure, and the NYDFS has imposed sanctions on the company.
• BUSD supply has fallen by more than 6%. Investors are looking for a way out amid regulatory pressure.

Since Monday, more than $700 million worth of BUSD tokens has been burnt by Paxos, the company that created the $16 billion Binance USD (BUSD) stablecoin. According to blockchain data, Paxos indicated that it would stop issuing the coin due to increasing regulatory pressure.

A Paxos Treasury cryptocurrency wallet transferred $703 million worth of BUSD tokens to a burn address for 27 hours starting on Monday morning, effectively removing the currencies from circulation, according to data from blockchain intelligence company Nansen.

BUSD is a dollar-pegged stablecoin that holders can exchange for dollars at any moment, thanks to its backing by short-term treasuries and other assets that resemble cash. According to rules from the New York Department of Financial Services, the state’s primary financial regulatory body, U.S.-based fintech company Paxos releases the token.

Paxos Treasury sent the first transaction of $144.5 million worth of BUSD at Monday 13:47 UTC, data from blockchain monitoring tool Etherscan shows – less than two hours after the announcement. Eight more transactions followed in the next 27 hours, worth $559 million.

The maneuver is a sign of investors exiting BUSD quickly. The $700 million redemption in a little more than a day represents some 6% of the total coins in circulation. Changpeng Zhao, chief executive of Binance, the world’s largest crypto exchange by trading volume, tweeted Monday that BUSD market capitalization will only decrease over time.

Faced with this issue, Binance also said that even if Paxos delists or the market share of BUSD soon announces, they will continue to support BUSD on their platform. Binance added that to “ensure our consumers are insulated from any excessive harm,” evaluations of other initiatives in certain countries would be required due to continued regulatory uncertainty in specific regions.

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