- Coinbase announced yesterday that it will cease support for BUSD
- The move comes after the SEC labelled BUSD a security and essentially forced Paxos to stop minting it
- SEC chair Gary Gensler recently said that all cryptocurrencies bar Bitcoin are securities
Coinbase has announced that it will cease supporting the Binance stablecoin BUSD following allegations from the Securities and Exchange Commission (SEC) that it constitutes a security. In a tweet posted yesterday, the company said that BUSD no longer met its “listing standards” and that as a result it is to be removed from trading on March 13. This move comes as no surprise, with Coinbase not wanting to rile the SEC anymore than it already has done, but with SEC Chair Gary Gensler saying recently that every coin other than Bitcoin is a security, one wonders where this might leave the crypto exchange industry in the months to come.
We regularly monitor the assets on our exchange to ensure they meet our listing standards. Based on our most recent reviews, Coinbase will suspend trading for Binance USD (BUSD) on March 13, 2023, on or around 12pm ET.
— Coinbase Assets (@CoinbaseAssets) February 27, 2023
SEC Actions Causing Ripple Effect
The BUSD issue started two weeks ago when Paxos was told to stop minting BUSD by the New York Department of Financial Services (NYDFS) after the SEC said it believed that the stablecoin was a security. Paxos had no choice but to comply, despite saying publicly that it didn’t believe that BUSD should be classified in this way, leaving other exchanges to mull over the prospect of allowing U.S. traders to trade a coin that the chief regulator believed contravenes their rules.
Given that Binance said in the wake of Paxos stopping the printing press that it was going to move away from BUSD, it seems that a re-listing is highly unlikely and that we are witnessing the decline of BUSD.
Exchanges on Red Alert Following Gensler Comments
The situation is not dissimilar to XRP, which we also delisted for U.S. customers following the SEC’s action against it in 2021, and with SEC Chair Gary Gensler telling New York Magazine last week that all cryptocurrencies bar Bitcoin are securities, this must be a difficult moment for exchanges.
Of course there is no saying that Gensler is going to issue each and every coin with legal proceedings, but if some blanket policy were eventually to come out which wrapped up all the other cryptocurrencies into a securities bundle then it’s not entirely clear how exchanges would handle it.