After Ripple and other major crypto players, the SEC is cracking down on stablecoin issuers. It ordered Paxos to stop issuing Binance USD (BUSD). The regulator found that the BUSD was unregistered security to justify this order. Naturally, this threatens other stable currencies in the US, such as Tether (USDT) and USD Coin (USDC), which raises questions about the future of stablecoins.
Analysts and experts have claimed that regulation against stablecoins is a witch hunt by regulators who believe they challenge fiat currencies.
This may be true, as the US dollar backs most stablecoins and can be considered an alternative to fiat currencies, including moving funds more discreetly from one country to another.
It is also curious that regulators are ordering companies to stop issuing only stablecoins, not other cryptocurrencies. For example, Paxos is a registered company with proven fiat reserves to guarantee BUSD, but it was still ordered to stop issuing BUSDs. It seems unfair and targeted.
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Market reaction
The news of the BUSD had shaken the crypto markets, particularly affecting Binance, which has seen more than $ 200 million in outflows, according to data from Santiment. Outflows are starting to slow down, and thankfully, Binance had enough capital to cover all withdrawals, but BNB suffered the most.
The BNB lost more than 10% in a few days before rebounding, thanks to Binance’s resilience. It also remains in 4th position on CoinMarketCap.
How will stablecoins adopt?
Despite a brief shock, the change in regulation did not affect the stablecoin market. All that happened was a reshuffle, with investors converting their BUSD to USDT. This shows that users and investors still believe in stablecoins and will stay in the market despite setbacks.
