Have you heard the news? Binance USD (BUSD), a stablecoin, has recently been approved by the New York State Department of Financial Services (NYDFS). This approval comes after careful scrutiny and evaluation of the partnership between Paxos Trust Company (Paxos) and Binance.

Paxos’ Oversight and Ceasing Minting BUSD

Paxos, a limited-purpose trust company regulated by the NYDFS, has been ordered to cease minting Paxos-issued BUSD due to unresolved issues regarding its relationship with Binance. In response, Paxos, on February 13, 2023, made an announcement to its customers about its decision to end its relationship with Binance for BUSD tokens[^1^].

The NYDFS is closely monitoring Paxos to ensure that the company can facilitate redemptions in a smooth and orderly manner. This includes implementing enhanced and risk-based compliance protocols^2^.

Authorized Issuance by Paxos

It is essential to note that the NYDFS has authorized Paxos to issue BUSD on the Ethereum blockchain. However, the NYDFS has not authorized Binance-Peg BUSD on any blockchain, and Binance-Peg BUSD is not issued by Paxos. As of now, there are no restrictions on the listing or exchange of existing Paxos-issued BUSD by entities licensed by the NYDFS in New York^3^.

Compliance and Supervision

In line with NYDFS requirements, all stablecoins issued by NYDFS-regulated entities, including BUSD, must be fully backed at a 1:1 ratio by cash or cash equivalents. These reserves undergo regular reviews by third-party attestations and internal and external independent reviews. Additionally, compliance with the NYDFS stablecoin guidance and supervisory agreements is subject to examination^4^.

Redeeming BUSD Tokens

Paxos is obligated to redeem its Paxos-issued BUSD tokens for U.S. dollars at a 1:1 exchange rate for customers in good standing, following compliance protocols. If you are a U.S. resident in possession of Paxos-issued BUSD and have not yet become a Paxos customer, you can apply to onboard as a Paxos customer. Once you have completed the onboarding process and the necessary due diligence, Paxos will redeem your BUSD tokens for USD at the aforementioned exchange rate^5^.

Please note that due to the influx of new customer and redemption requests, there may be extended processing times. If you encounter any difficulties creating an account with Paxos or wish to inquire about the status of your redemption request, you can submit a support request through the Paxos Support Website at help.paxos.com[^6^].

In conclusion, the authorization of Binance USD (BUSD) by the NYDFS signifies an important milestone in the world of stablecoins. With careful oversight and compliance protocols, users can have confidence in the transparency and reliability of BUSD as a stable digital currency.

[^1^]: Paxos Trust Company, “Paxos Will Halt Minting New BUSD Tokens,” (accessed on February 13, 2023).

[^6^]: Paxos Support Website, help.paxos.com.