When stables get rocked… New York regulators unbalanced the crypto industry this week, ordering Paxos — the crypto-services biz behind the third-largest stablecoin — to cease issuing its Binance USD (BUSD) token. Refresher: stablecoins are crypto pegged to real-world assets like the US dollar. They let folks interact with DeFi and smart contracts without the price volatility associated with other coins. But there’s a shake-up in the works:
- Destabilized: Paxos said it’ll stop creating new BUSD coins next week — and that it’ll no longer work with BUSD's brand partner, Binance.
- Axe-os: The SEC reportedly plans to sue Paxos over its sale of BUSD, alleging it's an unregistered security.
Byenance?… Paxos rolled out BUSD in 2019 and grew the coin to a $16B market cap in partnership with Binance. Now BUSD’s value is shrinking fast as investors ditch it. That could be bad news for Binance, which had seemingly solidified its crypto dominance after FTX’s fall. BUSD transactions were reported to make up 40% of the exchange’s trading volume last month. Binance's CEO, Changpeng “CZ” Zhao, said the exchange made 90% of its revenue from transaction fees. Yesterday CZ downplayed Binance’s connection to the stablecoin.
No one’s sleeping on crypto (regulation)… anymore. Last year's cascading bankruptcies at Celsius, BlockFi, and FTX left some lawmakers asking if crypto regulation was asleep at the wheel. Now regulators have downed a double espresso and set their sights on more than just stablecoins. The SEC said last week that it had reached a $30M settlement with US-based exchange Kraken over its staking program. And last month it went after Gemini's troubled Earn program.