Is the SEC's pending action against Paxos the opening salvo against stablecoins? Or is this more about Binance and a U.S. company’s relationship with the exchange? nikhileshde writes in this week's State of Crypto newsletter
against crypto staking was big news for, like, two days? This week we’re looking at the other big news from last week: Paxos and the Binance USD stablecoin it issues. The SEC has apparently alleged the sale of BUSD violates securities laws, and the New York Department of Financial Services has asked Paxos to cease issuing the token.
You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government.So … Paxos, eh? Stablecoin issuer Paxos is tussling with the U.S. Securities and Exchange Commission and the New York Department of Financial Services over the Binance USD stablecoin.Is this the opening salvo against stablecoins? Or is this more about Binance and a U.S.
While some are interpreting this as an assault on stablecoins, all signs so far seem to indicate this may be more about Binance and how it’s related to BUSD. I’ve spoken to a number of individuals over the past few days about this situation, all of whom asked to speak anonymously because of ongoing work with regulators.It seems difficult to square BUSD’s existence with the tenets of the Howey Test – 1) an investment of money 2) in a common enterprise 3) with the expectation of profit 4) from the efforts of others. For one thing, BUSD is a stablecoin.
What we do know is that the SEC’s so-called crypto crackdown – this week’s Wells Notice, coupled with last week’s Kraken settlement and Wednesday’s proposed rule – is escalating, and the industry is nervous.
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