Breaking: Paxos reportedly ordered to stop issuing Binance USD

[talkoncrypto Official]

The news come as no surprise , as its been speculated from days that SEC is keeping an eye on various staking options, and centralized exchanges for not following guidelines and using the mixing the users money with their assets..

The New York Department of Financial Services has reportedly ordered blockchain company Paxos Trust Co. to stop the issuance of dollar-pegged Binance USD (BUSD) stablecoin.

Source- https://cointelegraph.com/news/paxos-ordered-to-stop-issuing-binance-usd-report

Now what will be the consequences according to you:

1.. Binance will have to undergo liquidity issues

2. Will it have a major impact on Bitcoin Prices

Any other please share your opinion...

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[tiCeR]

The last word hasn't been spoken here yet if I understand correctly that Paxos has 30 days to respond and convince the SEC otherwise.
What I find a bit odd is that BUSD gets targeted first. What about Tether and USDC? This may just be the beginning of a wave of lawsuits against stable coin providers. I do get Armstrong's point that attacking regulated stable coin providers will only lead to people using offshore services, thereby increasing overall risk.

I don't know how the SEC will try to bend the law in their favor, but the securities term is already undergoing quite some stretches here and there when it comes to cryptocurrencies.


On this website I found the following under "What is not a security":

- An interest in a deposit account with a bank or a savings and loan association

If I had to decide whether stable coin staking is technically the same as holding a security, I would tend towards saying no because it seems to be more similar to a standard deposit account.

The XRP case is now three years old and there is still no decision how to go about it from the SEC's point of view. It's possible that this will also take years, but the SEC is already pushing for providers to cancel their staking programs and the issuance of new stable coin supply.

[jackg]

The last word hasn't been spoken here yet if I understand correctly that Paxos has 30 days to respond and convince the SEC otherwise.
What I find a bit odd is that BUSD gets targeted first. What about Tether and USDC? This may just be the beginning of a wave of lawsuits against stable coin providers. I do get Armstrong's point that attacking regulated stable coin providers will only lead to people using offshore services, thereby increasing overall risk.

As a bit of a lucky bunch, I reckon it's the worst stablecoin for actually being backed by anything of value. USDT recently publicised it's financial statement to the public for last year (I think) I saw it in another thread recently, USDC is managed by coinbase and another firm so it seems the safest of them all. (I've excluded dai as I don't think I fully understand it).

There's also the case that binance said any usdt or usdc deposited there would be converted to busd, I think that also makes it much riskier than usdc and usdt because of that (you're relying on multiple assets).

[dbshck]

What I find a bit odd is that BUSD gets targeted first. What about Tether and USDC?

Right, I'm curious about this as well. USDT and USDC are much larger than BUSD, why are they going after BUSD first?

Now what will be the consequences according to you:

1.. Binance will have to undergo liquidity issues

2. Will it have a major impact on Bitcoin Prices

Any other please share your opinion...

Paxos is just halting the issuance of new BUSD, they will still continue redemption. So a liquidity issue for Binance is unlikely here.

[bitmover]

The last word hasn't been spoken here yet if I understand correctly that Paxos has 30 days to respond and convince the SEC otherwise.
What I find a bit odd is that BUSD gets targeted first. What about Tether and USDC? This may just be the beginning of a wave of lawsuits against stable coin providers. I do get Armstrong's point that attacking regulated stable coin providers will only lead to people using offshore services, thereby increasing overall risk.

I believe all stable coins are similar and should have the same limitations imposed by sec.

However,  coinbase is a company which operates in US for nearly  a decade, they also completed everything demanded by the law and regulations to be listed in the stock market. It is harder for the SEC to target their products.

On the other hand,  binance operate in shadows in small countries...

[talkoncrypto Official]

@binance  outflows nearly $1B in the past 24 hours.

**both $BNB and $BUSD see dramatic drawdowns.

[tiCeR]

What I find a bit odd is that BUSD gets targeted first. What about Tether and USDC?

Right, I'm curious about this as well. USDT and USDC are much larger than BUSD, why are they going after BUSD first?

Now what will be the consequences according to you:

1.. Binance will have to undergo liquidity issues

2. Will it have a major impact on Bitcoin Prices

Any other please share your opinion...

Paxos is just halting the issuance of new BUSD, they will still continue redemption. So a liquidity issue for Binance is unlikely here.

Yes redemption is going on and I am asking myself whether the SEC could even put those operations on halt at once entirely. Wouldn't this usually be against their obligation to protect consumer interests? That would lead to a frenzy and a bank run at whatever exchange is still accessible and paying out BUSD.

The last word hasn't been spoken here yet if I understand correctly that Paxos has 30 days to respond and convince the SEC otherwise.
What I find a bit odd is that BUSD gets targeted first. What about Tether and USDC? This may just be the beginning of a wave of lawsuits against stable coin providers. I do get Armstrong's point that attacking regulated stable coin providers will only lead to people using offshore services, thereby increasing overall risk.

As a bit of a lucky bunch, I reckon it's the worst stablecoin for actually being backed by anything of value. USDT recently publicised it's financial statement to the public for last year (I think) I saw it in another thread recently, USDC is managed by coinbase and another firm so it seems the safest of them all. (I've excluded dai as I don't think I fully understand it).

There's also the case that binance said any usdt or usdc deposited there would be converted to busd, I think that also makes it much riskier than usdc and usdt because of that (you're relying on multiple assets).

@jackg I just checked out a couple of sources and it seems that BUSD is by no means the worst in terms of being backed by anything of value. BUSD is essentially 100% backed by US Treasury Bills and US Treasury Debt (with overnight maturity):





While this is how Tether is backed as per their report from December 2022:




Unless I am getting anything wrong here, it looks to me as if BUSD is at least as fine as Tether. Tether has relatively more positions that seem to come with weaker insurance.

[Bitcoin_Arena]

There's also the case that binance said any usdt or usdc deposited there would be converted to busd, I think that also makes it much riskier than usdc and usdt because of that (you're relying on multiple assets).

The excluded tether because of its huge volume so far in the platform but if you deposit USDC, TUSD or USDP, they would automatically be converted to BUSD

They also delisted any trading pairs of USDC, TUSD or USDP

[jaberwock]

There's also the case that binance said any usdt or usdc deposited there would be converted to busd, I think that also makes it much riskier than usdc and usdt because of that (you're relying on multiple assets).

The excluded tether because of its huge volume so far in the platform but if you deposit USDC, TUSD or USDP, they would automatically be converted to BUSD

They also delisted any trading pairs of USDC, TUSD or USDP

I sort of understand the logic behind that. There are a lot of people attacking Binance for how big they are, and they are rejecting to work with others because of this. Doesn't mean that they are doing anything bad, it just means they are doing what they think would be good for their company.

Additionally, if they do not accept USDC, just do not deposit that? Nobody forces anyone to do it, it is not like they are breaking a law by not accepting a coin. I believe this is not the solution to their problems, they need to figure out who is the one that keeps spreading these rumours about them being in trouble and we are seeing some of their opponents in this case.

[tiCeR]

There's also the case that binance said any usdt or usdc deposited there would be converted to busd, I think that also makes it much riskier than usdc and usdt because of that (you're relying on multiple assets).

The excluded tether because of its huge volume so far in the platform but if you deposit USDC, TUSD or USDP, they would automatically be converted to BUSD

They also delisted any trading pairs of USDC, TUSD or USDP

I sort of understand the logic behind that. There are a lot of people attacking Binance for how big they are, and they are rejecting to work with others because of this. Doesn't mean that they are doing anything bad, it just means they are doing what they think would be good for their company.

Additionally, if they do not accept USDC, just do not deposit that? Nobody forces anyone to do it, it is not like they are breaking a law by not accepting a coin. I believe this is not the solution to their problems, they need to figure out who is the one that keeps spreading these rumours about them being in trouble and we are seeing some of their opponents in this case.

Could it also be that Binance diversifies their own liquidity portfolio by taking those other pegged currencies and turning it into BUSD for their customers? They still own the other stable currencies and perhaps they expected to BUSD to get attacked at some point by the SEC like is the situation now. A risk could be that bank accounts or other liquid assets get frozen and they won't be able to serve their customers. But if they hold those other stable currencies they could still prevent a bank run and collapse from happening.

If they give out BUSD and we now have a look at their balance sheet and how everything is backed, the only way for them to fully back it 1:1 is by using their own cash to buy US Treasury Bills and US Treasury Debt. Otherwise they would have listed other stable digital currencies as some of the backing they have for distributed BUSD.

Now that it is clear that BUSD is also fully backed and at least as well backed as Tether is I think it is now only a question of time until those other stable currency providers will get mail from the SEC as well.

[livingfree]

2. I don't think that there's ever a major issue that will affect bitcoin's price. But as we look at the price of bitcoin, we saw that it has broken another price barrier that we haven't thought it would be.

But the idea of this is making more concerned on Binance's stable coin which is the BUSD.

If their stable coin gets affected then their entire exchange will get the affection and impact from this matter. So far, I don't see that there's a need to worry about it.

Because if there is, the first effect will take on BUSD and it will be depegged on USD's price.

[Bitcoin_Arena]

I sort of understand the logic behind that. There are a lot of people attacking Binance for how big they are, and they are rejecting to work with others because of this. Doesn't mean that they are doing anything bad, it just means they are doing what they think would be good for their company.

But the delistings were done way back, before the "attacks" started flying in. So no, they didn't delist the coins because they were being attacked.

Additionally, if they do not accept USDC, just do not deposit that?

They do "accept" the USDC because the deposit address is still there. It just gets auto converted to BUSD

I believe this is not the solution to their problems, they need to figure out who is the one that keeps spreading these rumours about them being in trouble and we are seeing some of their opponents in this case.

We will see when the BUSD volumes drop because of the recent developments. Paxos better fight hard and win the case against SEC because if they don't, Binance will have no choice but to probably relist the other stablecoin trading pairs.

Also, you speak like CZ is an Angel. He is the same person who attacked Coinbase without any concrete proof not so long ago only for him to delete the tweet once Brian Armstrong cleared off the claims

So if you keep attacking other platforms, what do you expect? A piece of pie in return?