With the fresh round of allegations, The SEC is now behind stablecoins after failing to nail cryptos and crypto platforms. Paxos has been registered with the New York State Department of Financial Services (NYDFS) and has been minting BUSD in collaboration with Binance. The BUSD is a stablecoin backed by USD, unlike to other algorithmic stablecoins whose value is supported by another crypto asset.
Despite this, the crackdown on Paxos appears to be predetermined with an intention to create FUD within the markets. The value of the BUSD debugged from $1 with a notable jump in the trading volume of more than 90%. Along with this, the value of BiananceCoin also dropped heavily below $300 with a huge jump in the trading volume of over 233%, dominated by bears.
What went wrong? Why SEC stopped Paxos from issuing new BUSD?
It’s a known fact that the SEC is closely watching the crypto space and hunting for possible ways to corner the crypto platforms. It has been witnessed in the Ripple vs SEC lawsuit, wherein the authorities have failed to prove XRP as a security and now have labeled it as a software code.
Therefore, it appears the next destination for the SEC is the stablecoins which are pegged to the USD. However, Paxos is believed to officially stop issuing dollar-pegged Binance tokens but may still allow redemptions of existing BUSD. Addressing the ongoing tussle, Binance CEO, CZ, in a series of tweets stated that BUSD is a stablecoin wholly owned and managed by Paxos.
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
The top crypto exchange, Binance, has encountered a similar situation with its so-called Indian counterpart ‘WazirX’. Binance distanced itself from WazirX as Indian regulators cracked down on crypto and now escaping away from Paxos.
Collectively, the crypto markets are plunging down significantly, and with the fresh CPI rates which are believed to be rolled out soon, the markets could rise slightly. But eventually, the bears have gained strength and hence may hold a tight grip over the markets for some time ahead.
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Qadir AK
Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
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Qadir AK