• SEC Enforcement Action on Paxos causes setbacks for BUSD Stablecoin
• BUSD’s Market Capitalization Plummets from $23.49 Billion to Below $10 Billion
• Binance Facing Regulatory Issues and Potential Lawsuits from US Regulators
Recent SEC Action Causes Setbacks for BUSD Stablecoin
The US Securities and Exchange Commission (SEC) recently took enforcement action against the issuer of the BUSD stablecoin, Paxos, causing a plunge in trading volume and market capitalization. According to data, its market capitalization dropped from its all-time high of $23.49 billion on November 15th 2022 to below $10 billion by March 3rd 2023. Despite this, BUSD still remains as the third largest stablecoin by market cap.
Binance Struggles with Regulatory Investigations
The market cap started declining after Paxos announced that they would stop issuing the coin on February 13th 2023. This comes after Binance was under investigation by US regulators for potential regulatory non-compliance, violation of investor protection law, and anti-money laundering rules violation. In an interview, Binance’s chief strategy officer Patrick Hillmann said that they were working with regulatory authorities to resolve these issues but noted that it could result in hefty fines for the crypto exchange.
Paxos Receives Notice from NYDFS
Following these issues, Paxos received a notice of an impending lawsuit from the SEC regarding their Binance USD stablecoins as well as an order from New York Department of Financial Services (NYDFS) asking them to stop minting and issuing new coins in February. In response to this situation, Paxos released a statement regarding their decision to halt minting while investors rushed to withdraw their holdings out of fear of losing their money due to potential legal proceedings against Binance associated with this issue.
Impacts on Other Stablecoins
Due to this news surrounding BUSD’s fate, other major stablecoins such as USDT and USDC have also seen declines in value as part of a larger shift in the landscape of cryptomarket capitalization caused by regulatory actions taken against various exchanges and platforms.
As the SEC continues its enforcement actions against exchanges like Binance and issuers like Paxos, investors should be aware of how regulatory changes can potentially affect their investments in cryptocurrencies or related products such as stablecoins like BUSD.