The entire Stablecoin market could be shaken if U.S. regulators decide to prosecute Binance USD (BUSD), a stable coin issuer, CNBC reported on the 20th (local time).
Stablecoin is a cryptocurrency designed to be fixed to the value of the U.S. dollar or euro to minimize price volatility, and the market size is $137 billion.
The U.S. Securities and Exchange Commission (SEC) demanded an explanation from Paxos, believing that BUSD issued by Paxos corresponds to securities.
Paxos has been issuing BUSD through a contract with Binance, the world’s largest crypto exchange, and BUSD is a securities but has not reported it.
Paxos has been suspended from issuing BUSD by the New York Financial Supervisory Service (NYDFS) on the 13th.
CNBC reported that the SEC has not yet begun official measures, and that the virtual currency industry is paying keen attention to the SEC’s upcoming measures.
This is because if the SEC enters the official process for Paxos, it could also affect the issuance of Tether (USDT) and USD Coin (USDC), the world’s top three stable coins, along with BUSD.
Paxos reportedly says that under federal law, BUSD is not a securities and cannot agree with the SEC’s claim.
The SEC has not yet made any specific allegations against Paxos.
If BUSD is considered a security, Stablecoin must be supervised by regulatory authorities, and its issuers must register with the SEC and follow stricter regulations.
“If the SEC prosecutes Paxos, other stablecoin issuers will have to register with the SEC or have a court battle,” said Renato Marioti, a partner lawyer at the law firm BCLP.
However, some predict that SEC’s measures will not spread to the entire market.
Carol Alexander, a professor of finance at the University of Sussex in England, analyzed, “The U.S. regulators’ action is more against Binance than Stable Coin.”