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According to a Reuters report, Paxos, the first regulated blockchain infrastructure platform behind Binance’s BUSD stablecoin, is in ongoing discussions with the Securities Exchange Commission (SEC) following a regulatory crackdown on the industry.
According to the report, Paxos CEO Charles Cascarilla said in an email sent Saturday that the company is in an ongoing “constructive conversation” with the SEC. The talks started after the SEC lawsuit, which alleges that the Binance-branded stablecoin is a security that is not registered in US jurisdictions.
We have engaged in constructive discussions with the SEC, and we look forward to continuing those dialogues privately.
In addition, Paxos’ CEO claims that if needed, the company is willing to maintain its position that BUSD is not a guarantee through litigation.
Is the Paxos-Binance Partnership Over?
BUSD stablecoin issuer Binance has stopped minting tokens following an order from the New York State Department of Financial Services (NYDFS). The company said on February 21 that Paxos will stop issuing new BUSD tokens and will coordinate with NYDFS.
Paxos said it would also “end its relationship” with the largest crypto exchange, Binance, following the SEC and NYDFS investigations.
BUSD is a stablecoin associated with the crypto exchange Binance. BUSD aims to provide a more stable cryptocurrency alternative for traders and investors looking to escape the volatility of the digital asset market. Each BUSD token is pegged one-to-one to the US dollar held in reserve.
While the SEC has not filed a specific fee, a notice issued by the NYFDS questions whether stablecoins are securities under US supervisory jurisdiction. Thus, other stablecoins will have the same label for the SEC. Paxos has stated that it disagrees with SEC enforcement because “BUSD is not a security under the federal securities laws.”
On the other hand, Townsend Lansing, Head of Product at CoinShares, Europe’s most significant digital asset trading and investment group, addressed the BUSD/Paxos feud in a recent interview with CNBC, stating:
The basis for that action will certainly be the fact specific to Paxos’ BUSD structure but will likely have far-reaching implications for other stablecoin issuers selling coins to the US.
In addition, Lansing said it was highly unlikely that BUSD would no longer be sold in the US or available to American customers with access to US exchanges.
The SEC’s regulatory policies towards the crypto industry could have various consequences for other stablecoin issuers in the US and could create more worries on investor sentiment. This environment could negatively impact any investment from US entities in the crypto space.
Stablecoin market cap stands at $137 billion and has an 11.74% share of the total crypto market cap, according to CoinGecko data. The total crypto market cap is $1.17 trillion, which represents a decrease of 0.96% over the last 24 hours. The market cap of the largest asset in the crypto industry, Bitcoin, is $475 billion, representing a dominance of 40.64%.
Featured image from Unsplash, chart from TradingView.
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