CZ, the CEO of Binance, took to his Twitter account to address the recent news of the SEC's plan to pursue legal action against Paxos over the BUSD stablecoin.
1.In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
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.
3.As a result, BUSD market cap will only decrease over time.
4. Paxos will continue to service the product, and manage redemptions.
Paxos also assured us the funds are #SAFU, and fully covered by reserves in their
banks, with their reserves audited many times by various audit firms already.
5. On the alleged SEC vs Paxos lawsuit, I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos.
I am not an expert on US laws. But personally, I agree with Mile’s logic here (not that it means much): The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos.
But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria.
No one has ever had “the expectation of profit” when buying $BUSD.
6. IF BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.
7. Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.
8. Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.
Market Commentary
The controversy surrounding Paxos and Binance USD (BUSD) stablecoin has sparked concerns over regulatory scrutiny of the stablecoin market. The SEC's move to sue Paxos over BUSD has raised questions about how stablecoins are regulated, and whether they should be considered securities.
If BUSD is ultimately classified as a security, it could have significant implications for the cryptocurrency industry, as other stablecoins may also come under increased regulatory scrutiny. This could lead to a shift in the way stablecoins are used and traded, and may even impact the broader crypto market.
It's worth noting that stablecoins have become increasingly popular in recent years, as they provide a way to transfer value without the volatility of traditional cryptocurrencies like Bitcoin. However, as with any financial product, they need to be properly regulated to ensure investor protection and stability of the financial system.
Overall, the controversy highlights the need for clear and consistent regulatory frameworks for stablecoins and the broader cryptocurrency industry, to promote innovation while protecting consumers and investors.
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#legalaction
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