Coinbase announced on February 27 that it would suspend trading of the Binance USD (BUSD) stablecoin on March 13, citing its internal “listing standards” as the rationale behind the decision. The third-largest stablecoin by market capitalization, BUSD, will be suspended from Coinbase.com (simple and advanced), Coinbase Pro, Coinbase Exchange, and Coinbase Prime. However, customer funds will remain accessible and can be withdrawn anytime.
According to a Coinbase spokesperson: “Our decision to suspend trading for BUSD was based on our internal monitoring and review processes. Having reviewed BUSD, we determined that it no longer meets our listing standards and must be suspended.”
Coinbase’s Digital Asset Listings Group votes on which assets to list on their exchange, following a “rigorous vetting/review process” that assesses the assets against legal, compliance, and technical security standards. Business assessments are also conducted to ensure an asset continues to meet standards. However, this process was questioned when, on February 12, the United States Securities and Exchange Commission (SEC) issued a Wells notice—a notice of planned enforcement action—towards blockchain infrastructure platform Paxos Trust, the issuer of BUSD.
Also, this prompted New York State’s Department of Financial Services to order Paxos to cease issuing BUSD on the 13th. Following this, the market cap dropped by $2 billion within days. On February 14, Coinbase posted a Twitter thread declaring that stablecoins are not securities and that they were unaware of any aspects of BUSD which might interest the SEC. Paxos was later reported to have been in “constructive” talks with the SEC on February 21.