Coinbase Makes A Move Against Binance USD As Financial Regulators Srcutinize Stablecoin Issuer

Coinbase, one of the largest centralized cryptocurrency exchanges (CEX) in the world, has announced it will suspend trading of Binance USD stablecoin on its platform, a few days after U.S. financial regulators put pressure on the stablecoin issuer Paxos.

Coinbase on Monday announced it will suspend BUSD trading on its platform starting March 13, citing the stablecoin's inability to meet its listing standards as a result of its recent reviews.

"Our determination to suspend trading for BUSD is based on our own internal monitoring and review processes. When reviewing BUSD, we determined that it no longer met our listing standards and will be suspended," a Coinbase spokesperson told CoinDesk.

While the exchange's decision will apply to both simple and advanced trade on Coinbase.com, Coinbase Pro, Coinbase Exchange and Coinbase Prime, it clarified that its customers' "BUSD funds will remain accessible to you, and you will continue to have the ability to withdraw your funds at any time."

Coinbase has a digital asset listings group that votes on the crypto assets to be listed on the platform, which it described as a team "informed by a rigorous vetting/review process that evaluates assets against legal, compliance, and technical security standards."

Apart from that, Coinbase conducts additional business assessments and continuous monitoring to make sure an asset listed on its platform continues to meet prevailing standards.

The exchange's latest move against BUSD, the third-largest stablecoin by market capitalization, was not received well by some members of the crypto community. They criticized Coinbase for easily caving into regulatory pressure.

"You & others really need to come together & be proactive with the SEC. Otherwise, regulation is going to be dictated to you & no one will like it. There are ways to fight this & yet, you seem incapable of seeing it & just continue to yield to SEC's every demand," one user tweeted.

Coinbase's decision to suspend BUSD trading came on the heels of mounting regulatory pressure and scrutiny on Paxos.

The New York State Department of Financial Services (NYDFS), earlier this month, ordered Paxos to stop minting more BUSD tokens.

The U.S. Securities and Exchange Commission also sent a Wells Notice to Paxos, which the company confirmed. Moreover, Paxos told its employees earlier this month that it was working with the SEC after being notified by the financial regulator that it should have registered the token as a security.

"We are engaged in constructive discussions with the SEC, and we look forward to continuing that dialogue in private," Paxos CEO Charles Cascarilla said in an email to employees.

The SEC and other financial regulators have started a crackdown on cryptocurrency companies and businesses following the epic collapse of the crypto empire FTX, which wiped out billions of dollars in investment.