The sources of the American newspaper indicate that this regulatory action is motivated because the body chaired by Gary Gensler treats BUSD as an unregistered security with the SEC.
The company, which partnered with Binance in 2019 to develop and launch this ‘stablecoin’, has not commented on it. It should be noted that BUSD is the third largest stablecoin in the market, with a market capitalization of 16 billion of dollars, and it is not the only one that issues Paxos, since it is also the creator of the stablecoin Paxos Dollar (USDP)which launched in 2018. Also, the company is behind the exchange itBit.
For its part, a Binance spokesperson has indicated that BUSD is a “product issued and owned by Paxos”, with Binance licensing its brand to signature for use with BUSD. The spokesperson added that Paxos is regulated by the New York Department of Financial Services (NYDFS) and that BUSD is a “1-to-1 backed stablecoin.”
“Stablecoins are a critical safety net for investors seeking refuge from volatile markets and limiting their access would directly harm millions of people around the world. We will continue to monitor the situation. Our global users have a wide range of stablecoins at their disposal.”
Paxos’ notice to its investors
“As of February 21, Paxos will stop issuing new BUSD tokens following the instructions of and working closely with the New York Department of Financial Services. Paxos has always prioritized the security of its customers’ assets. That was true at our founding and continues to be true today. BUSD will remain fully backed by Paxos and redeemable to onboarding customers until at least February 2024. New and existing Paxos customers will be able to redeem their US dollar funds or convert their BUSD tokens to Pax Dollar (USDP), a regulated US dollar-backed stablecoin also issued by the Paxos Trust,” the company said in a signed statement. by Charles Cascarilla, CEO of Paxos.
SEC regulations on cryptocurrencies
The SEC has stepped up regulation on cryptocurrencies in recent weeks. Last Thursday, the agency fined the exchange Kraken $30 million and prohibited it from providing staking services in the United States.. The ‘staking’ or bet allows investors to obtain a return by temporarily delivering their cryptocurrencies to an intermediary or to a cryptocurrency network.
According to different experts, this action has served as a warning to other players in the sector and has hinted that it could pursue this type of service in the future. He has also accused bankrupt crypto lender Genesis and Gemini of similar regulatory violations over the Gemini Earn program.
Until now, the SEC has not taken action against any major stablecoin issuer. However, when the agency last year expanded its special regulatory compliance unit dedicated to the cryptocurrency market, it noted that stablecoins would be an area of focus.
Source: Ambito
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