Regulatory Crackdown on BUSD Issuer Paxos

02/14/2023 06:06 • AI Insights • 145 views

On February 14, Markus Thielen, the research director of Matrixport, a crypto financial service company, believed that the recent regulatory crackdown on the BUSD issuer Paxos and the review of its Binance USD were not aimed at all stable currencies, which may be due to the lack of strict regulation of the issuer Paxos on tokens.

Matrixport Research Director: The regulatory crackdown on the BUSD issuer Paxos is not aimed at all stable currencies

Analysis based on this information:

The recent regulatory crackdown on BUSD issuer Paxos and the review of its Binance USD came as a surprise to many crypto investors. Markus Thielen, the research director of Matrixport, a crypto financial service company, believes that the crackdown was not specifically aimed at stable currencies. It appears that the lack of strict regulation on tokens may have been the root cause of the problem.

Stable currencies are a type of cryptocurrency that is pegged to a stable asset or fiat currency. The purpose of stable currencies is to provide a more stable and predictable price in comparison to other cryptocurrencies, which are highly volatile. BUSD is one of the most popular stable currencies in the crypto market, with a market capitalization of over $10 billion.

Paxos, the issuer of BUSD, has been under regulatory scrutiny for a while. The New York State Department of Financial Services (NYDFS) recently imposed a $3.5 million fine on Paxos for violations of New York’s banking law. The NYDFS found that Paxos had conducted unauthorized and unregistered activity with the issuance of its stablecoin.

Binance USD, which is also issued by Paxos, was recently reviewed by the US Treasury Department. The review examined whether Binance USD was being used for money laundering or terrorist financing activities. Although the outcome of the review is still not clear, it highlights the increasing regulatory scrutiny that stable currencies are facing.

The lack of strict regulation on tokens appears to be the root cause of the regulatory crackdown on Paxos. The NYDFS found that Paxos had not registered as a trust company or obtained the necessary approvals to conduct its activities. Additionally, there are concerns about the lack of transparency and accountability in the stable currency market, which makes it difficult for regulators to monitor the activities of issuers.

In conclusion, the regulatory crackdown on BUSD issuer Paxos highlights the need for stricter regulation in the stable currency market. While stable currencies are designed to provide stability and predictability, the lack of regulatory oversight can pose risks to investors and the financial system. It remains to be seen how regulators will approach the stable currency market in the future, but it is clear that the current regulatory framework needs to be reevaluated.

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Regulatory Crackdown on BUSD Issuer Paxos

Matrixport Research Director: The regulatory crackdown on the BUSD issuer Paxos is not aimed at all stable currencies

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