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CORRECTION (Feb. 13, 2023, 16:10 UTC):Corrects that Paxos said it would cease issuing Binance USD at the direction of the New York Department of Financial Services, not the U.S. Securities and Exchange Commission.

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Stablecoin issuer Paxos will stop minting new Binance USD (BUSD) tokens at the direction of the New York Department of Financial Services (NYDFS), with the news coming just after a report of the threat of legal action from the U.S. Securities and Exchange Commission (SEC). It was reported on Sunday that the SEC intended to sue Paxos for selling BUSD as an unregistered security. This came only days after CoinDesk reported that Paxos was under investigation by NYDFS. BUSD is a Binance-branded stablecoin issued and managed by Paxos. Binance said it would be reviewing projects in markets where regulatory uncertainty could cause difficulties for users.

A modest weekend rally in bitcoin (BTC) and ether (ETH) was snuffed out by the Paxos/SEC report on Sunday evening. Bitcoin had managed to claw back above $22,000, but the price fell several hundred dollars in the minutes after the report hit, and early Monday morning was trading around $21,700, roughly where it closed the week last Friday. Wall Street equity futures steadied Monday ahead of the release of U.S. consumer price data on Tuesday.

EU banks would have to place the maximum possible risk weight on crypto assets under a draft law published by the European Parliament on Friday. The planned rules could determine how the traditional financial sector engages with digital assets. Under the proposed rules, as previously reported by CoinDesk, banks would have to disclose their direct and indirect exposure to crypto, while the European Commission prepares more detailed guidelines for the sector.

Chart of the Day

• The chart shows the yield on the U.S. two-year treasury note has jumped more than 30 basis points to 4.54% this month, reaching the highest since Nov. 30.
• A continued move higher might push risk assets, including stocks and cryptocurrencies, lower.
• When yields rise, stocks tend to fall in value because of lower future earnings. Cryptocurrencies tend to move in line with stocks.

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