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NYDFS Orders Paxos to Stop Issuing BUSD Due to Unresolved Relationship Problems with Qian’an

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On February 14, the New York State Department of Financial Services (NYDFS) officially explained that: \”The department has ordered Paxos to stop casting the BU…

NYDFS Orders Paxos to Stop Issuing BUSD Due to Unresolved Relationship Problems with Qianan

On February 14, the New York State Department of Financial Services (NYDFS) officially explained that: “The department has ordered Paxos to stop casting the BUSD issued by Paxos, because Paxos has several unresolved problems in the supervision of its relationship with Qian’an in respect of the BUSD issued by Paxos. In response, on February 13, 2023, Paxos informed the customer of its intention to end the BUSD relationship with Qian’an.”

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Interpret the above information:


The message from the New York State Department of Financial Services (NYDFS) on February 14 reveals the regulatory agency’s order for Paxos to cease issuing the BUSD due to problems with its relationship with Qian’an. The NYDFS cited the unresolved problems in the supervision of the said relationship as the reason behind the order.

The BUSD is a stablecoin built on the Ethereum blockchain and is pegged to the US dollar, making it a popular choice for those who want to avoid price volatility in cryptocurrencies. Paxos, a regulated financial institution based in New York, issues the BUSD.

The mention of Qian’an, however, adds a layer of complexity to the situation. Qian’an is a Chinese fintech firm that has partnered with Paxos to help facilitate BUSD transactions in China. As China has a strict regulatory environment when it comes to cryptocurrencies, it is crucial for Paxos to have a strong and compliant relationship with Qian’an to avoid any potential legal issues.

The NYDFS’s order implies that Paxos has not delivered on its responsibilities regarding the supervision of its relationship with Qian’an. Yet, it is unclear what these problems are and why they have not been resolved. The order also does not indicate any specific violations or sanctions against either Paxos or Qian’an.

In response to the NYDFS’s order, Paxos announced on February 13 that it intends to end its relationship with Qian’an. This move could suggest that Paxos took preemptive action due to pressure from the regulator or that the partnership with Qian’an was no longer profitable.

Paxos and other stablecoin issuers face increasingly stringent regulations in the US and abroad. The order from the NYDFS could signal the government’s intention to be more vigilant about stablecoin issuers’ partnerships and compliance with regulatory requirements.

In conclusion, the NYDFS’s order for Paxos to stop issuing the BUSD due to unresolved relationship problems with Qian’an highlights how regulatory bodies are paying closer attention to the stablecoin sector’s operations. It remains to be seen what specific problems caused the relationship issues between Paxos and Qian’an, indicating the need for greater transparency in the industry.

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