U.S. regulators take aim at stablecoin… 177 trillion won market tension
The US Securities and Exchange Commission (SEC) is putting pressure on the virtual asset market. This time, it is aiming for a stablecoin.
According to CNBC on the 20th (local time), the SEC judged that Paxos, the issuer of the stablecoin Binance USD (BUSD), violated federal securities laws, and is considering whether to prosecute Paxos.
Stablecoins are cryptocurrencies designed to peg their value to major fiat currencies such as the dollar or euro to reduce volatility, and the market size reaches $137 billion (approximately 177.4 trillion won).
Paxos issued BUSD in partnership with Binance, the world’s largest virtual asset exchange. BUSD is a stablecoin pegged to the US dollar.
The SEC regards BUSD as a security, but Paxos pointed out that it did not register BUSD, which is a security, in advance.
In response, Paxos countered, saying, “BUSD is not a security under federal securities laws.”
The SEC has yet to make a full-fledged move against Paxos. If the SEC takes action, it is expected to have a big impact on the entire stablecoin market.
Similar measures can be taken for Tether (USDT) and USD Coin (USDC), the world’s three largest stablecoins along with BUSD.
If BUSD turns out to be a security, Paxos will have to comply with the strict rules of regulators.
The industry believes that if the SEC prosecutes Paxos, other stablecoin issuers will have to either register with the SEC or prepare for a court battle.
Some predict that the SEC and Paxos can reach an amicable agreement. Analysts say Paxos will recognize BUSD as a security and other stablecoins will also follow SEC regulations.
There is also an interpretation that it could be a sanction against Binance, not a stablecoin.
Carol Alexander, a professor of finance at the University of Sussex in the UK, said, “This is an action against Binance rather than a stablecoin.
The U.S. Department of Justice is investigating Binance for money laundering and sanctions violations. Binance is also under suspicion of insider trading from the US government.