The Binance USD (BUSD) stablecoin has been suspended by Coinbase, one of the biggest cryptocurrency exchanges in the world, due to worries that it does not adhere to its listing standards.
BUSD “does not satisfy our listing standards,” according to a blog post published on Wednesday by Coinbase, and as a result, it will no longer be accepted on the platform as of March 5. Users who have previously bought BUSD on Coinbase’s platform are allowed to keep their purchases and transfer them outside of the exchange.
Binance USD is a stablecoin that is produced by the Binance exchange and pegged to the US dollar. It is one of the numerous stablecoins that have appeared in the cryptocurrency market in recent years, giving investors and traders a stable substitute for the erratic performance of other cryptocurrencies like Bitcoin and Ethereum.
Regulators and business leaders alike have begun to scrutinise stablecoins like BUSD. Recently, questions have been asked regarding the oversight and transparency of stablecoin issuers, as well as the possible risks they pose to the stability of the financial system.
These worries will likely grow as a result of Coinbase’s decision to suspend BUSD, which indicates that even major cryptocurrency exchanges are unwilling to support stablecoins that do not adhere to their listing requirements.
Coinbase did not go into detail in its blog post about the precise reasons why BUSD does not adhere to its listing requirements. The exchange did, however, mention that it assesses each cryptocurrency it posts “against our Digital Asset Framework to assess factors like security, compliance, and the project’s alignment with our goal of creating an open financial system for the world.”
After receiving criticism from authorities in the UK and Japan, Binance, the stablecoin’s issuer, decided to delist BUSD just a few weeks ago. The Financial Conduct Authority (FCA) in the UK warned Binance that the exchange was not permitted to run in the nation. The Financial Services Agency (FSA) in Japan issued a warning because Binance was conducting business there without a permit.
Since then, Binance has declared that it will stop all regulated operations in the UK. It is also rumoured that Binance is in discussions with Japanese regulators to abide by local laws. However, the exchange’s future activities and the stability of its stablecoins are now under scrutiny due to regulatory pressure.
Being one of the biggest cryptocurrency exchanges in the world, Binance’s business is likely to be significantly impacted by Coinbase’s move to suspend BUSD. With a total supply of more than $6.3 billion, Binance USD is presently the fourth-largest stablecoin by market capitalization, according to data from CoinMarketCap.
However, Binance also offers other stablecoins in its inventory, such as USDT and USDC, which are backed heavily by significant cryptocurrency exchanges and are pegged to the US dollar. It is unclear whether the move by Coinbase to suspend BUSD will have a cascading effect on other exchanges and result in a broader review of stablecoins in the cryptocurrency sector.
As a more stable substitute for more volatile cryptocurrencies like Bitcoin and Ethereum, stablecoins have grown in significance within the cryptocurrency environment. Regulators and industry participants, who are worried about the possible risks they pose to financial stability, have increased their scrutiny of them as well.
Some detractors have expressed worries that stablecoins aren’t actually supported by the assets they claim to be correlated to and that issuers might not have enough reserves to support their stablecoin offerings. Others have expressed concern that stablecoins might be used for illegal purposes like money laundering or funding terrorism.
The move by Coinbase to suspend BUSD may be interpreted as evidence that major cryptocurrency exchanges are aware of these issues and are prepared to take appropriate action to safeguard their users and uphold the integrity of the cryptocurrency market. The action might also encourage other platforms to copy it and rethink their support for stablecoins that don’t adhere to their listing requirements.
Some industry professionals have, however, issued a warning against overreacting to Coinbase’s decision, pointing out that stablecoins continue to play a significant role in the cryptocurrency environment and have a variety of acceptable use cases.
One of the biggest cryptocurrency exchanges, Coinbase, has stated that starting on March 5, it will stop supporting the Binance USD (BUSD) stablecoin on its platform. The exchange claimed that BUSD “does not satisfy our listing standards.” Other platforms may reconsider their support for stablecoins that don’t adhere to their listing requirements as a result of this action. Stablecoins continue to be a crucial tool for traders and investors to control risk in the erratic cryptocurrency market, so some experts advised against overreacting. Others pointed out that the decision by Coinbase to suspend BUSD might also have been influenced by business factors.
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