New York requires crypto service providers to obtain a BitLicense that comes with regulatory oversight. “BUSD is a 1-to-1 backed stablecoin that is one of the most transparent stablecoins in existence,” Binance said in a statement, adding that it will continue to monitor the situation with respect to Paxos. Pax Dollar - or USDP - has a market value of $859 million. The token has a $16 billion market value, making it the largest stablecoin after Tether and USD Coin, according to CoinGecko. Paxos, based in New York, operates Binance’s BUSD in a partnership with the world’s biggest digital-asset exchange. The TerraUSD ecosystem, a stablecoin that relied on complex algorithms and trader incentives, suffered a $60 billion wipeout last year that roiled crypto markets. Stablecoins have led to controversy because of past failures. Some are underpinned by a matching reserve of assets like cash and bonds. Stablecoins are intended to hold a set value, for example $1, and come in a variety of forms. The firm on its website stresses consumer protection and says that reserves for both of the stablecoins it issues are held wholly in cash and US Treasuries. Paxos is regulated by the New York State Department of Financial Services.

“The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing,” the spokesperson said. A spokesperson for the regulator said it can’t comment on ongoing investigations. Paxos, which also issues its own stablecoin called Pax Dollar, didn’t immediately respond to a request for comment. The exact scope of the investigation is unclear. The New York State Department of Financial Services has recently begun probing Paxos, a person familiar with the matter said, asking not be identified discussing private information. (Bloomberg) - Paxos Trust Co., issuer of a Binance-branded token that ranks as the third-largest stablecoin, is being investigated in the US in the latest regulatory escalation to hit the cryptocurrency sector.

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