Major U.S. crypto exchange Coinbase is ending support for the Paxos-issued stablecoin BUSD.
In an announcement on Monday, Coinbase said it would suspend trading of BUSD at around noon ET on March 13.
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
Although trading will be suspended on all of Coinbase’s trading platforms, including Coinbase Pro and Coinbase Prime, BUSD funds will remain accessible to users, who will have the ability to withdraw them at any time.
The exchange cited its listing standards as the reason behind the decision to end support for the stablecoin that has recently become the subject of regulators’ scrutiny.
Earlier this month, the New York State Department of Financial Services ordered Paxos to stop minting BUSD, after which Paxos announced that it was ending its relationship with Binance. The U.S. Securities and Exchange Commission has also launched an investigation into Paxos regarding the stablecoin offering. (This and the SEC’s stance on crypto were discussed with Mike Selig, counsel at Willkie Farr, on Unchained Premium and Unchained and with Coinbase lawyer Paul Grewal and Polygon lawyer Rebecca Rettig on Unchained.)
Coinbase’s decision comes despite a statement it made shortly after the SEC issued a Wells notice to Paxos, saying that “stablecoins are not securities.”
This week the NYDFS ordered US-based Paxos to stop issuing US dollar-denominated stablecoin BUSD and the SEC issued a Wells notice to Paxos. We don’t know what aspects of BUSD might be of interest to the SEC.
What we do know: stablecoins are not securities 🧵
— Coinbase (@coinbase) February 15, 2023
BUSD was once a top-three stablecoin by market cap, but has lost significant market share to Tether-issued USDT and Circle-issued USDC in the last few weeks. Since the SEC’s enforcement actions on Feb. 13, BUSD’s market cap has fallen from $16.14 billion to $10.74 billion at the time of writing.
Meanwhile, USDT and USDC have grown their market cap by over $2 billion respectively over the same period.