Is Stablecoin BUSD The Only Target?
Whether stablecoins are securities or not, that's a question. Howey test criteria do not fulfill the requirement to define stablecoins as securities. When people buy stablecoins, there is no intention of making a profit like stablecoins prices rise and then they can make a profit selling them.
Recently the Securities and Exchange Commission (SEC) issued a Wells Notice to Binance USD (BUSD) issuer Paxos Trust Company. Then Paxos got an order from the New York State Department of Financial Services (NYDFS) to stop issuing any new BUSD. So the third largest stablecoin BUSD is defined as an unregistered security.
Paxos also has Pax Gold that is a gold-backed stablecoin. Will they go after Pax Gold saying that's also an unregistered security? So how about the second largest stablecoin USDC and the most controversial and largest stablecoin USDT? Or, are they Binance?
After FTX collapsed, the blame went to Binance, the top centralized crypto exchange. In the beginning, Binance helped FTX to grow, but it grew faster. Maybe the FTX could grow more and give a challenge to the top crypto exchange. What FTX did with customers' funds and the way they operated their business, that was terrible. What happened to FTX, that would definitely happen, you cannot run a business like this forever.
Crypto exchange Binance revealed what they were going to do with FTT tokens and the rest was history. If the regulatory authority keeps silent about other stablecoins and only takes action against BUSD, it can indicate something else. But if they go after other stablecoins, it implies they are taking down stablecoins one by one. And BUSD is the first target on their list.
You will find BUSD with almost all trading pairs in Binance. While trading in Binance, many people use BUSD. I do not feel comfortable having BUSD. It is very difficult to what is going to happen in crypto next. It will not take a long time to change the whole situation even though it seems the crypto project is solid.
For example, when things started turning in a different direction in FTX, people who took action quickly to withdraw their cryptocurrency from the FTX, they got away with that. Many people got stuck in FTX and lost their crypto assets. Who knows whether they will get their crypto back in the future or not?
Let's see what happens next with BUSD and other stablecoins. The centralized authority will go hard on crypto and I do not see the situation will change any time soon. It will also be a test of crypto and how it shows its power to survive and grow.
Image Sources: 1, and 2.
Reference: 1.
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I think reserve-backed stablecoins like BUSD, USDT and USDC will have to fall in line with the financial regulators, or face elimination. They can't do much about algo-backed stablecoins such as HBD or DAI, except ban them from centralized exchanges like Canada did recently.
More regulatory crackdown makes it hard especially for stablecoins. They can order fiat-backed stablecoins to blacklist certain addresses and it will happen accordingly.
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It seems to me that all the exchanges play with our trust. And we don't have any other way either.
I think centralized exchanges will retain their position unless DeFi becomes stronger, more secure, and user-friendly.
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