Crypto exchange Coinbase has once again reduced its workforce by 20% and 950 employees have been laid off.

Coinbase Delisted BUSD Due to Liquidity Concerns

  • Coinbase listed BUSD last April.
  • Paxos Trust has operated BUSD since 2019 and was recently ordered to stop minting the stablecoin.

Coinbase CEO Brian Armstrong has offered a deeper explanation of the exchange’s decision to delist the Binance USD (BUSD) stablecoin. Armstrong spoke on Bloomberg TV on Wednesday morning and explained that Coinbase had concerns about BUSD’s liquidity. Coinbase previously stated that delisting BUSD was because the stablecoin did not meet its listing standards as determined by its own internal monitoring and review procedures. 

While speaking to Bloomberg, Armstrong explained,

The reason we did that was that Paxos, the issuer of BUSD, had been ordered to stop minting it, so we were concerned about liquidity issues for our customers.

The New York Department of Financial Services (NYDFS) recently ordered Paxos to stop minting the BUSD stablecoin, citing complications in Paxos and Binance’s relationship. The Securities and Exchange Commission was also set to sue Paxos for selling an unregistered security.

Data from CoinGecko shows that BUSD is the third-largest stablecoin by market capitalization with a total value of almost $10 billion, only below USDT and USDC stablecoins. Paxos Trust has been operating  BUSD since its launch in 2019.

Interestingly, Coinbase only listed BUSD last April. Top exchanges such as Coinbase list different stablecoins to give customers a diversity of trading pairs against other crypto assets. Customers occasionally exchange one stablecoin for another. Also, listing multiple tokens offers redundancy in the case that one token loses reputation or credibility. So, the recent ban on minting BUSD could see more exchanges delisting the stablecoin.

Timothy Cradle, Director of Regulatory Affairs at Blockchain Intelligence Group, sees Coinbase’s decision to halt BUSD trading as an effort to evade regulators who would claim the exchange allowed the trading of unregulated securities.

Cradle said in a recent interview,

They’re probably coming to the same conclusion that I think most rational people would come to. This is going to end in a settlement, the cease-and-desist [order] is going to be somewhat permanent, and Paxos would have to register with the SEC to re-launch the coin.

Cradle also claimed that exchanges adopted similar measures in 2020 following the SEC’s XRP dispute with Ripple. At the time, top exchanges, including Coinbase, temporarily suspended trading XRP due to the yet-to-be-resolved case between the SEC and Ripple.

Lawrence Woriji
Lawrence Woriji Verified Author

I have covered some exciting stories in my career as a journalist and find blockchain-related stories very intriguing. I believe Web3 will change the world and want everyone to be a part of it.

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