Binance stablecoin backer says US SEC has called token unregistered securities | – #Binance #stablecoin #backer #SEC #called #token #unregistered #securities
WASHINGTON/LONDON, Feb 13 (Reuters) – Paxos Trust Company, the firm behind Binance’s stablecoin, USA The Securities and Exchange Commission (SEC) has told the company it needs to register the product as a security and is considering taking action against it. platform.
In a statement on Monday, Paxos said it disagrees with the SEC’s claims that Binance USD is a security and is “prepared to litigate vigorously if necessary.”
While Chairman Gary Gensler has previously said he believes some stablecoins are securities, the move is one of the SEC’s first related to stablecoins.
The announcement comes hours after the New York Department of Financial Services (NYDFS) said in a consumer alert that it had ordered Paxos to stop issuing Binance USD, citing “unresolved issues” with its oversight of Paxos’ relationship with Binance.
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A NYDFS spokesperson later told Reuters via email that Paxos breached its obligations to perform “coordinated, periodic risk assessments” and due diligence checks on Binance and Binance USD customers to stop “bad actors from using the platform.”
Paxos said in a statement that traditional cash and USA The new treasury-backed Binance said it will stop issuing USD from February 21, but will continue to support and redeem tokens until at least February 2024.
In a subsequent statement confirming the SEC’s notice to the firm on Monday, Paxos said there are “unequivocally no other allegations” against the company.
“Paxos has always prioritized the security of its customers’ assets,” the company said in a statement.
An SEC spokesman said the agency does not comment on whether there is a possible investigation.
Stablecoins, digital tokens backed by traditional assets typically designed to hold a fixed value, have emerged as one of the main cogs in the crypto-economy. They are used for trading between volatile tokens such as bitcoin and in some developing economies to protect savings against inflation.
According to analysts, the NYDFS move is a setback in Binance’s efforts to gain market share from larger stablecoin rivals such as Tether and USD Coin. By Paxos offer Losing its New York-regulated status could also hurt Binance’s appeal to larger investors, they said.
“This is a huge setback for Binance,” said Ivan Kaczkowski, FX and crypto strategist at UBS. “It remains to be seen if (and when) Binance will find a solid partner in the US for its stablecoins. The latter seems very important after the US regulation of stablecoins, which is not too late.”
THE RACE FOR “CRYPTO DOLLARS”.
Binance USD is the third largest stablecoin after market leader Tether and USD Coin, with around 16 in circulation billion dollar and is the seventh largest cryptocurrency according to market tracker CoinGecko.
Joseph Edwards, an investment adviser at the cryptocurrency company Enigma Securities, said, “in theory, the cryptocurrency would de jure both dollars whom substitute had the potential to do,” he said.
“What’s seen on the tables today is a significant flight from BUSD to USDT (Tether),” he said.
According to CoinGecko, the platform’s native token, Binance Coin, was last down 9.7%.
Binance CEO Changpeng Zhao wrote in a series of tweets on Monday that the regulator’s decision meant that “BUSD’s market cap will only decrease over time,” adding that Paxos Binance will withdraw funds entirely from Paxos. bank he assured that he will be covered by his reserves.
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Binance will “continue to support BUSD for the foreseeable future,” Zhao said, predicting that users will “move to other stablecoins over time.”
The NYDFS move, first reported by the Wall Street Journal, comes amid a broader crackdown on cryptocurrencies and Binance by US regulators. The Department of Justice is investigating Binance for money laundering and sanctions violations. Binance previously said it regularly works with regulators to address their questions.
Reporting by Hannah Lang in Washington and Tom Wilson and Elizabeth Howcroft in London Editing by Caitlin Webber and Matthew Lewis
Our standards: Thomson Reuters Trust Principles.
Elizabeth Howcroft
2023-02-14 03:20:24
Source – reuters
Translation“24 HOURS”