$BUSD Experiences Outflows as Issuer Paxos is Investigated by NYDFS

The New York Department of Financial Services (NYDFS) is looking into Paxos, a stablecoin issuer, according to CoinDesk. It is unknown what the full extent of the investigation entails. Paxos' stablecoins include the Pax dollar ($USDP) and Binance USD ($BUSD), which is a Binance-branded stablecoin provided through a white-label service. The NYDFS spokesperson stated that the agency cannot comment on ongoing investigations.

Paxos treasury sees increasing inflow, which is for burning $BUSD back into US dollars, according to dashboard created by parsec, a DeFi Analytics company.

Recently, rumors circulated that the U.S. Office of the Comptroller of the Currency may ask Paxos to withdraw its application for a full banking charter, but Paxos has denied these rumors. Nevertheless, the ongoing investigation by the state regulator suggests that the company, which was granted a provisional bank charter by the OCC in 2021, is under close scrutiny. Paxos holds a virtual currency license, also known as BitLicenses, issued by the NYDFS.

$BUSD is the 3rd largest stablecoin with $16 billion market cap. Paxos publishes monthly reserve assets report. According to its latest reserve asset report for January 2023, the stablecoin is backed by US dollar liquid assets including short-term U.S. Treasuries and dollar deposits.