A cryptocurrency financial service With the regulatory crackdown on BUSD issuer Paxos, Matrixport’s head of research believes regulators are not targeting all stablecoins.
Financial services based on cryptocurrency According to Matrixport’s head of research, the recent scrutiny of Paxos and its Binance USD token is not a direct attack on stablecoins.
Matrixport’s Markus Thielen suggested in a Feb. 14 analysis that Paxos Trust Company, the issuer of the Binance USD, may not have been stringent enough in its oversight of the token.
He went on to say that the problem “does not appear to be around stablecoins” in and of itself.
“Paxos had breached its commitment to conduct targeted, periodic risk assessment and due diligence on Binance and Paxos-issued BUSD clients,” Thielen contended.
The New York Department of Financial Services (NYDFS) ordered Paxos to stop issuing BUSD on February 13 “because to multiple unresolved issues connected to Paxos’ management of its relationship with Binance.”
Paxos also recently stated that the US Securities and Exchange Commission (SEC) served the stablecoin issuer a Wells notice on Feb. 3 for allegedly failing to register the offering under federal securities laws.
Thielen notes that while BUSD has released $11 billion on Ethereum, $4.8 billion has also been accounted for to be issued on the Binance Smart Chain, in the form of a tokenized version of BUSD.
“It looks that the NYDFS is now concerned that the $4.8 billion may not have been sufficiently guaranteed or that there may have been concerns with being 1:1 backed,” he said.
However, as recently as February 13, Paxos announced that “BUSD tokens created by Paxos Trust have and always will be backed 1:1 with US dollar-denominated reserves, fully segregated and stored in bankruptcy distant accounts.”
Binance repeated this stance in a statement to Cointelegraph, adding, “BUSD is a 1 to 1 backed stablecoin that is one of the most transparent stablecoins in existence.”
Thielen speculates that some of the regulatory steps may have been prompted by the Jan. 24 event in which Binance mingled user cash with collateral.
Recent measures against BUSD have led some to worry that other stablecoins may be in jeopardy.
Paxos recently declared that “there are unequivocally no other allegations against Paxos” aside from the current BUSD situation.
Meanwhile, Dante Disparte, Circle’s Chief Strategy Officer and Head of Global Policy, told Cointelegraph that “USDC is a regulated dollar digital currency issued as stored value under US money transmission legislation.”
“In any form of regulatory action like this, the facts and circumstances are all different, as are the structural and regulatory issues with each of the cryptocurrencies that are in circulation around the world,” Disparte noted.
Thielen, on the other hand, has urged the sector not to be excessively concerned about the future of the BUSD.
“Binance has shot itself a little bit in the foot here, but they are working on it and it should be rectified. So, should we be concerned?” Thielen explained.
“I don’t believe so. Is the peg snapping? NO. We are no longer in a bad market where you are concerned about the downside; in bull markets, you are concerned about the upside,” he added.
