Debate on BUSD’s securitization
Paxos CEO Charles Cascarilla has had constructive discussions with the U.S. Securities and Exchange Commission (SEC) in an internal message on the 18th, following the order to suspend the issuance of the US dollar stablecoin Binance USD (BUSD). explained.
This content was reported by overseas media such as “Reuters” who obtained the message for the company. Cascarilla said he will continue to discuss privately with the SEC.
He also explained that the reason for terminating the relationship with Binance was not related to the SEC and the New York State Department of Financial Services (NYDFS). “Changes in the market made our relationship with Binance no longer aligned with our strategic priorities,” he said.
Paxos received a “Wells Notice” from the SEC this month for failing to register its securities, in addition to being ordered by the NYDFS to stop issuing BUSD. A Wells notice is a formal letter to a company or individual informing them that the SEC will take legal action. The SEC claims BUSD to be a security.
connection: Explains why the NY State Financial Services Authority ordered the suspension of the issuance of the stablecoin “BUSD”
In this message, Cascarilla maintains that BUSD is not a security. He reminded employees that he would defend the company’s position by filing a lawsuit if necessary.
Even if the Wells notice is received, enforcement of the enforcement action will still require a vote of five SEC commissioners. As such, it does not necessarily lead to litigation.
connection: Binance CZ mentions the need for stablecoins other than the US dollar such as the Japanese yen
Current Status of BUSD Redemption
Paxos announced on the 13th of this month that it will stop issuing new BUSD on the 21st. At that time, we will continue to give top priority to the safety of customer assets, continue to manage reserves, and explain that we will respond to redemption of BUSD until at least February 2024.
The internal email also revealed that more than $2.8 billion worth of BUSD has been redeemed so far. In response to the response of the US authorities, changes are beginning to appear in the stablecoin power map.
BUSD dominance fell to 12% from 17% in Nov 2022, according to Glassnode data. Meanwhile, Tether (USDT)’s dominance is expanding, surpassing 50% again last week.
connection: Change in stablecoin power map While BUSD dominance is declining, USDT is over 50% again
What is a stablecoin
A cryptocurrency whose price is always stable. Various stablecoins have been developed whose value is backed by legal currency or virtual currency, or whose price is stabilized by algorithms.
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