BUSD is a US dollar stablecoin issued by Paxos Trust Company and co-branded with a large offshore crypto exchange. It is no longer issued. The New York State Department of Financial Services (NYDFS) ordered Paxos to stop minting it, and Paxos stopped creating new BUSD on 21 February 2023. Tokens that already exist still count. Paxos says on its BUSD support page that onboarded customers can redeem Paxos-issued BUSD for US dollars or convert it to Pax Dollar (USDP), its other regulated stablecoin.
The most recent official development came on 7 August 2025. NYDFS announced a $48.5 million settlement with Paxos over failures in how it oversaw its BUSD partner.
BUSD at a glance
| Item | Detail |
|---|---|
| Issuer | Paxos Trust Company |
| Regulator | NYDFS |
| Peg | 1 BUSD = 1 US dollar, redeemable 1:1 through Paxos |
| Launched | September 2019, announced as NYDFS-approved |
| New issuance ended | 21 February 2023 |
| Current status | No new tokens; redemption to USD or conversion to USDP for onboarded Paxos customers |
How BUSD worked
Issuance and redemption
When BUSD launched in September 2019, Paxos and its exchange partner said NYDFS had approved it. Paxos acted as both the issuer and the custodian of the dollars backing it. Customers could buy BUSD directly from Paxos and redeem it at a 1:1 rate for US dollars.
Reserves
In its statement of 13 February 2023, Paxos said that BUSD it issued "is always backed 1:1 with US dollar-denominated reserves, fully segregated" and held in bankruptcy-remote accounts. NYDFS requires stablecoins issued by the firms it regulates to be "fully backed 1:1 by cash or cash equivalents." It checks this through third-party attestations and internal and external reviews.
Paxos-issued BUSD and "pegged" BUSD are different
NYDFS authorised Paxos to issue BUSD on the Ethereum blockchain only. A separate bridged version, a "pegged" BUSD, circulated on other blockchains. Paxos did not issue it, and in its April 2023 notice NYDFS said it had not authorised that version on any blockchain. The redemption rights described below apply only to Paxos-issued BUSD on Ethereum.
Can you still redeem your BUSD?
Answer three questions to see which redemption route, if any, the article describes for the BUSD you hold.
Is your BUSD the Paxos-issued token on Ethereum?
- Yes, Paxos-issued BUSD on Ethereum → next question
- No, a bridged "pegged" BUSD on another blockchain → Paxos does not redeem this version
- I am not sure → Check which version you hold first
Are you an onboarded Paxos customer?
- Yes, I have an onboarded Paxos account → next question
- No, and I am a US resident → Apply to be onboarded by Paxos
- No, and I am not a US resident → Ask Paxos about onboarding
Which do you want for your BUSD?
- US dollars → Redeem for US dollars through Paxos
- Pax Dollar (USDP), Paxos's other regulated stablecoin → Convert to USDP through Paxos
Paxos did not issue the bridged "pegged" BUSD, and NYDFS said it had not authorised that version on any blockchain. The Paxos redemption rights apply only to Paxos-issued BUSD on Ethereum.
Paxos-issued BUSD lives on Ethereum. Tokens on other chains are bridged copies that Paxos did not issue, so confirm the chain before you try to redeem.
Redemption and conversion are open only to onboarded Paxos customers. NYDFS said US residents who are not yet customers can apply to be onboarded, and that high demand may slow processing.
Redemption and conversion are open only to onboarded Paxos customers. The article's sources describe onboarding applications for US residents only, so confirm with Paxos whether you can be onboarded.
Paxos lets onboarded customers redeem Paxos-issued BUSD for US dollars at 1:1. Its current BUSD page lists this option and gives no end date; check the timing with Paxos before acting.
Paxos lets onboarded customers convert Paxos-issued BUSD to Pax Dollar (USDP). Its current BUSD page lists this option and gives no end date; check the timing with Paxos before acting.
This shows only the routes the article describes: it cannot confirm current Paxos terms, deadlines, fees or your eligibility, and it is not investment advice.
Why BUSD was shut down
2023: the minting order
On 13 February 2023, Paxos announced that it would stop issuing new BUSD on 21 February, as NYDFS had directed, and end its BUSD relationship with the exchange. NYDFS said its order came from unresolved concerns about how Paxos oversaw that relationship. In 2025 the regulator called it the first orderly wind-down of a stablecoin.
2023 to 2024: the SEC question
Paxos says it received a Wells notice from SEC staff on 3 February 2023. The notice said staff were considering a recommendation to treat BUSD as an unregistered security. Paxos disputed this. On 11 July 2024, Paxos announced that it had received a termination notice on 9 July 2024 and that the SEC would not pursue enforcement action. This account of the outcome comes from Paxos's own statement.
2025: the NYDFS settlement
On 7 August 2025, NYDFS announced that Paxos had agreed to two payments:
- a $26.5 million penalty to New York State
- at least $22 million invested in its compliance programme under a remediation plan approved by NYDFS
NYDFS reached these findings:
- Paxos lacked adequate controls to monitor illicit activity at or through its BUSD partner, and did not raise red flags with its senior management or board.
- A review of selected assets from 2017 to 2022 found $1.6 billion in transactions with illicit actors flowing to or from the partner's platform.
- The partner's weak geofencing let US users reach an unregulated exchange.
- Paxos's own know-your-customer and transaction-monitoring controls were deficient.
Paxos said the issues were historical, have been fixed, and did not harm customers.
If you still hold BUSD
- Check which version you hold. Paxos-issued BUSD lives on Ethereum. Paxos does not redeem tokens on other chains, because it did not issue them.
- Use a Paxos account. Redemption and conversion are open only to onboarded Paxos customers. NYDFS said US residents who are not yet customers can apply to be onboarded, and that high demand may slow processing.
- Choose USD or USDP. Paxos lets customers redeem BUSD for US dollars or convert it to USDP.
- Check the timing with Paxos. In 2023 Paxos promised support "through at least February 2024." Its current BUSD page lists both options and gives no end date.
What BUSD's story shows about stablecoins
- A regulated issuer does not guarantee every version of the token. Only the Ethereum token Paxos issued had NYDFS approval. The bridged copies did not.
- Regulators can stop issuance quickly. It took eight days to go from Paxos's announcement on 13 February 2023 to the end of minting.
- Due diligence on partners matters. The 2025 settlement penalised the issuer over what it failed to check at its distribution partner.
Limitations: redemption terms can change, so confirm the current conditions with Paxos before acting. Nothing here is investment advice.
