The United States continues to put pressure on various cryptocurrency users and companies. Paxos and Binance appear to be in the regulatory crosshairs right now following Kraken was targeted by the SEC last week and forced to suspend its staking services.
As reported by Wall Street Journal On Sunday, the US Securities and Exchange Commission (SEC) plans to file a lawsuit once morest Paxos, the company that issues Binance USD Coins (BUSD) and Pax Dollar (USDP), for the issuance of stablecoins.
The reports kept claiming, unsurprisingly, that the SEC claims that BUSD is an unregistered security. The announcement came just days following rumors surfaced that Paxos was the subject of an investigation by the New York Department of Financial Services (NYDFS).
PAXOS HAS BEEN ORDERED TO STOP ISSUING BUSD
However, the New York Department of Financial Services (NYDFS) has now ordered Paxos to stop issuing new BUSD stablecoins.
The announcement caused a lot of fear in the market, but Changpeng “CZ” Zhao, the CEO of Binance, has moved to reassure clients that your assets are safe despite expected legal action.
2/ We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS).
Paxos is regulated by NYDFS.
BUSD is a stablecoin wholly owned and managed by Paxos.
— CZ ???? Binance (@cz_binance) February 13, 2023
Zhao stated in a Twitter post on February 13 that Paxos is regulated by the NYDFS and that BUSD is “wholly owned and managed by Paxos.” All funds, according to CZ, are “SAFU” on both Binance and Paxos, but the latter will continue to operate the stablecoin and manage redemptions.
The Binance CEO predicted that as a result of the enforcement measure, BUSD’s market capitalization would decline over time and that the exchange would consider stablecoins that do not depend on the US dollar.
SUPPORT FOR BUSD CONTINUES ON THE BINANCE EXCHANGE
Separately, CZ said that despite the potential migration of users to other stablecoin tokens as a result of the enforcement action, Binance would continue to support the stablecoin on its exchange.
Changpeng Zhao stressed that,
“Binance will continue to support BUSD for the foreseeable future. We anticipate that over time, users will migrate to other stablecoins, so we will make appropriate adjustments to the product, eg, stop using BUSD as the main trading pair, etc.”
Security charges once morest a stablecoin – currently the third largest stablecoin – are expected to be the last thing regulators might consider raising. Stablecoins are a highly appreciated entry point for consumers entering the cryptocurrency space for the first time.Therefore, this action might pose a significant threat to the sector.
Furthermore, attacking a stablecoin would be a short-sighted and regressive move by the regulator. In addition to stifling innovation and limiting consumer choice, this move would also send the message to the rest of the world that the jurisdiction is hostile to new innovations, evolution, and financial freedom.
