Matrixport Executive Thinks BUSD Crackdown Won’t Spread To All Stablecoins
15 Fevereiro 2023 - 7:23AM
NEWSBTC
Matrixport’s executives believe the regulatory enforcement on BUSD
will not impact all stablecoins. Moreover, according to the
executive, other issues surround the crackdown. The United States
regulators are striking hard on some crypto firms, including
Kraken, Coinbase, and Paxos. In addition, the recent crackdown on
Binance USD stablecoin might increase uncertainty in the crypto
space as many wonders if the crackdown spreads to other
stablecoins. The Current Crackdown Linked to Issuer Management
Problems The New York Department of Financial Services (NYDFS)
ordered the issuer of BUSD, Paxos Trust Company, to stop issuing
the BUSD stablecoin. The action was based on unresolved problems
regarding the issuer’s oversight in its relationship with the
Binance crypto exchange. Related Reading: Bitcoin NUPL Retests Key
Support, Will BTC Rebound? Paxos would still handle the redemption
of the existing stablecoin tokens from users till 2024. The NYDFS
confirms that it will continue to monitor the firm’s approach
through the redeeming process. The head of research at Matrixport,
a crypto-financial service firm, reacted to the brewing tension in
the crypto industry following the regulators’ crackdown on BUSD. He
stated that the enforcement action on BUSD is not a target against
all stablecoins. The executive thinks that the blockchain firm
Paxos could have been flexible in its management of BUSD. So, the
main problem is not generally revolving around stablecoins.
Further, Thielen explained that Paxos failed to comply with the
primary management roles as the issuer of the stablecoin. For
example, according to him, the firm couldn’t conduct tailored and
periodic assessments of issued BUSD customers. Also, there wasn’t
any due diligence in the firm’s management. Notably, the United
States Securities and Exchange Commission (SEC) sent a notice to
Paxos alleging its sales of unregistered security earlier this
month. In addition, the regulator plans to sue Paxos over its
activities with BUSD. Regulators Doubt The BUSD Backed Reserves
According to Thielen, the stablecoin has issued about $11 billion
on the Ethereum blockchain. Also, about $4.8 billion of Binance-peg
BUSD tokens are on the BNB Smart Chain (BSC). Notably, Binance
offers a token-pegged service that locks BUSD on Ethereum. However,
Binance-Peg BUSD is on BNB Chain and several other blockchains like
Polygon and Avalanche. The Matrixport executive explained that the
NYDFS might be worried that the $4.8 billion are not fully backed.
There could be issues with the supposed 1:1 backing for the BUSD
stablecoin. Also, he mentioned that part of the reasons for the
crackdown on BUSD could be from the incident in January when
Binance joined its customers’ funds with collateral. Related
Reading: Bitcoin Large Transactions Explode, Whales Buying The Dip?
On its part, Paxos confirmed its readiness to comply with the
order, as it will stop BSUD issuance by February 21. Also, the
blockchain firm assured users that the stablecoin has a 1:1 US
dollar backing on its reserves. Furthermore, it stated that the
reserves are fully segregated and kept in bankruptcy remote
accounts. Featured image from Pixabay, charts from TradingView.com
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