{"id":17595,"date":"2023-02-13T20:04:51","date_gmt":"2023-02-13T20:04:51","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/binance-ceo-warns-of-profound-impacts-on-crypto-industry-if-busd-is-ruled-as-a-security-altcoins-bitcoin-news\/"},"modified":"2023-02-13T20:04:51","modified_gmt":"2023-02-13T20:04:51","slug":"binance-ceo-warns-of-profound-impacts-on-crypto-industry-if-busd-is-ruled-as-a-security-altcoins-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/binance-ceo-warns-of-profound-impacts-on-crypto-industry-if-busd-is-ruled-as-a-security-altcoins-bitcoin-news\/","title":{"rendered":"Binance CEO Warns of ‘Profound Impacts’ on Crypto Industry if BUSD Is Ruled as a Security \u2013 Altcoins Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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Binance CEO Changpeng Zhao (CZ) has warned of \u201cprofound impacts\u201d on the crypto industry if stablecoin Binance USD (BUSD) is ruled as a security. His warning followed an alleged lawsuit by the U.S. Securities and Exchange Commission (SEC) against Paxos, the issuer of Binance USD.<\/strong><\/p>\n

Binance\u2019s CEO on SEC Action Against Paxos and BUSD<\/h2>\n

Following the news<\/a> that the U.S. Securities and Exchange Commission (SEC) intends to take action against Paxos Trust Company over stablecoin Binance USD (BUSD), Binance CEO Changpeng Zhao (CZ) took to Twitter Monday to explain the situation.<\/p>\n

Paxos, which is regulated by the New York Department of Financial Services (NYDFS), also announced Monday that \u201cit will end its relationship<\/a> with Binance for the branded stablecoin BUSD.\u201d Paxos also said it \u201cwill cease issuance of new BUSD tokens\u201d on Feb. 21.<\/p>\n

\u201cWe were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS),\u201d Binance\u2019s CEO tweeted, emphasizing:<\/p>\n

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BUSD, even though called Binance USD, is not issued or redeemed by Binance \u2026 BUSD is a stablecoin wholly owned and managed by Paxos.<\/p>\n<\/blockquote>\n

CZ noted that when Paxos stops minting new BUSD tokens, the stablecoin\u2019s market cap \u201cwill only decrease over time.\u201d At the time of writing, BUSD has a market cap of nearly $16 billion, making it the world\u2019s seventh-largest cryptocurrency and the third-largest stablecoin.<\/p>\n

According to Zhao, \u201cPaxos will continue to service the product and manage redemptions.\u201d He added that Paxos has assured Binance that funds are safe \u201cand fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.\u201d<\/p>\n

CZ on Alleged SEC Lawsuit Against Paxos<\/h2>\n

The Binance CEO also commented on the alleged SEC lawsuit against Paxos. While admitting that he is \u201cnot an expert on U.S. laws\u201d and has no additional information about the case other than public news articles, CZ said he personally agrees with crypto analyst Miles Deutscher\u2019s assessment.<\/p>\n

Deutscher tweeted<\/a> his opinion Monday morning about the SEC action against Paxos over Binance USD. He wrote:<\/p>\n

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The SEC has labelled BUSD as an \u2018unregistered security,\u2019 and is suing its issuer, Paxos. But how on earth is a stablecoin considered a security, when it clearly doesn\u2019t meet the Howey Test criteria. No one has ever had \u2018the expectation of profit\u2019 when buying BUSD.<\/p>\n<\/blockquote>\n

In a follow-up tweet, Deutscher acknowledged: \u201cTechnically it doesn\u2019t need to pass the Howey Test to be considered a security.\u201d Nonetheless, he stressed: \u201cThe SEC basically has free reign to define an investable asset as a security if it wishes to. But it undoubtedly sets a scary precedent.\u201d<\/p>\n

Commenting on whether BUSD is a security, the Binance CEO warned:<\/p>\n

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\u2018IF\u2019 BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.<\/p>\n<\/blockquote>\n

\u201cBinance will continue to support BUSD for the foreseeable future,\u201d CZ added, noting:<\/p>\n

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We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly \u2014 e.g. move away from using BUSD as the main pair for trading, etc.<\/p>\n<\/blockquote>\n

\u201cGiven the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm,\u201d the Binance executive concluded.<\/p>\n

Last week, the SEC took action<\/a> against Kraken over the crypto exchange\u2019s staking program. The exchange agreed to wind down the service for U.S. clients and pay $30 million in disgorgement, prejudgment interest, and civil penalties. Kraken CEO Jesse Powell subsequently urged<\/a> Congress to pass a law to protect the U.S. crypto market and U.S. consumers \u201cwho will now be going offshore to obtain services no longer available in the U.S.\u201d<\/p>\n

What do you think about the SEC stating that stablecoin BUSD is an unregistered security? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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\nKevin Helms <\/h6>\n

\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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