Crypto Market in Danger? No Time for Panic or FUD
• The U.S. Securities and Exchange Commission (SEC) and the New York Department of Financial Services (NYDFS) have initiated regulatory crackdowns on Paxos and Binance, which has caused a lot of uncertainty in the crypto industry.
• The SEC filed a Wells Notice against Paxos for its Binance USD issuance, alleging that it might not have properly backed the pegged version of its stablecoin.
• Industry leaders advocate shunning FUD during this time of turmoil and believe that the situation will eventually pass.
The crypto industry is facing fear, uncertainty, and doubt (FUD) due to a regulatory crackdown on Paxos and Binance by US regulators. This has caused some turmoil in the market, but industry leaders are confident that it will pass with time.
SEC Enforcement Action Against Kraken
The United States Securities and Exchange Commission (SEC) recently brought an enforcement action against Kraken trading platform, alleging that its staking services is an unregistered security offering in violation of securities laws. The regulator asked Kraken to pay $30 million in fines for this violation.
Wells Notice Against Paxos
The SEC also issued a Wells Notice against Paxos for its Binance USD (BUSD) issuance due to concerns about the company’s relationship with Binance not being sufficiently scrutinized. As of today, these pegged BUSDs are worth $4.8 billion with total market capitalization exceeding over $15 billion across all supported chains.
Paxos Disagrees With SEC Classification
Paxos disagrees with the categorization of its BUSD stablecoin as security by the US SEC staff and is considering litigation if necessary to protect their interests. They maintain that their stablecoin is fully backed 1:1 with US dollar-denominated reserves and is compliant with all applicable regulations around financial safety and customer assets protection.
Industry Leaders Advocate Shunning FUD
Industry leaders remain confident that this turbulence will eventually pass without any major repercussions on Bitcoin or other digital currencies‘ markets. They advocate shunning FUD during this period and continuing to support innovation within the ecosystem despite regulatory pressures from external actors like governments or regulators