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Binance CEO Warns of ‘Profound Impacts’ on Crypto Industry if BUSD Is Ruled as a Security – Altcoins Bitcoin News

Binance CEO Warns of 'Profound Impacts' on Crypto Industry if BUSD Is Ruled as a Security Following SEC Action

Binance CEO Changpeng Zhao (CZ) has warned of “profound impacts” on the crypto industry if stablecoin Binance USD (BUSD) is ruled as a security. His warning followed an alleged lawsuit by the U.S. Securities and Exchange Commission (SEC) against Paxos, the issuer of Binance USD.

Binance’s CEO on SEC Action Against Paxos and BUSD

Following the news that the U.S. Securities and Exchange Commission (SEC) intends to take action against Paxos Trust Company over stablecoin Binance USD (BUSD), Binance CEO Changpeng Zhao (CZ) took to Twitter Monday to explain the situation.

Paxos, which is regulated by the New York Department of Financial Services (NYDFS), also announced Monday that “it will end its relationship with Binance for the branded stablecoin BUSD.” Paxos also said it “will cease issuance of new BUSD tokens” on Feb. 21.

“We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS),” Binance’s CEO tweeted, emphasizing:

BUSD, even though called Binance USD, is not issued or redeemed by Binance … BUSD is a stablecoin wholly owned and managed by Paxos.

CZ noted that when Paxos stops minting new BUSD tokens, the stablecoin’s market cap “will only decrease over time.” At the time of writing, BUSD has a market cap of nearly $16 billion, making it the world’s seventh-largest cryptocurrency and the third-largest stablecoin.

According to Zhao, “Paxos will continue to service the product and manage redemptions.” He added that Paxos has assured Binance that funds are safe “and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.”

CZ on Alleged SEC Lawsuit Against Paxos

The Binance CEO also commented on the alleged SEC lawsuit against Paxos. While admitting that he is “not an expert on U.S. laws” and has no additional information about the case other than public news articles, CZ said he personally agrees with crypto analyst Miles Deutscher’s assessment.

Deutscher tweeted his opinion Monday morning about the SEC action against Paxos over Binance USD. He wrote:

The SEC has labelled BUSD as an ‘unregistered security,’ and is suing its issuer, Paxos. But how on earth is a stablecoin considered a security, when it clearly doesn’t meet the Howey Test criteria. No one has ever had ‘the expectation of profit’ when buying BUSD.

In a follow-up tweet, Deutscher acknowledged:…

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