Stablecoin Wars: Paxos Ordered to Stop Minting BUSD

in #hive-1679222 years ago

BUSD is a stablecoin that is 100% owned and managed by Paxos. They hodl the reserves for BUSD - handling deposits and withdrawals to and from the stablecoin into USD.

For example, if you want to mint 1 BUSD then you send 1 USD to Paxos and they mint you 1 BUSD. If you want to turn 1 BUSD back into 1 USD, you send 1 BUSD to Paxos, they burn it and then send you 1 USD.

Stablecoin Wars: Paxos Ordered to Stop Minting BUSD

As of today, Paxos was ordered to stop minting BUSD by the New York Department of Financial Services (NYDFS). Obviously, Paxos is regulated by the NYDFS and has major operations in the United States.

This Thread by CZ outlines some limited information about it - basically, the same information that everyone else has. CZ claims he only knows what is publicly known and doesn't have any insider knowledge of the case at this time.

Since this news broke, BUSD has been struggling to maintain its peg. We all know this is a massive FUD play - as long as Paxos is solvent, then there is nothing to worry about long-term in terms of BUSD remaining at $1.

Is BUSD Going to Die?

I think it's important to understand how things like this tend to work. BUSD is a stablecoin and does not meet the qualifications of the Howey Test. It seems to me that this is more so a FUD campaign rather than a real litigation. I have a feeling that this whole thing might just blow over without any real damage done to BUSD (outside of sentiment).

CZ's words sounded pretty negative regarding BUSD though. In his short Thread, he talks about Binance phasing down some products that revolve heavily around BUSD and also taking a look at non-USD stablecoins.

Ultimately, I hope this is a non-event for BUSD but I think that the impact could be felt in a few different ways. There will definitely be less traction and less positive sentiment for BUSD going forward.

What About Stablecoins and Crypto

We're living in a moment in crypto right now where Governments and Corporations are trying to stand up to Crypto in a big way. They've always been anti-crypto - obviously, they have to be... Crypto is anti-corporation and government in a lot of ways. It is anti-establishment and centralized power structures which is the entire business model driving these gov's and corp's.

I think one of the major wars in crypto for the next few years will be fought over stablecoins and trying to deem certain cryptos as securities. The thing is, look at the XRP lawsuit... Look at other times that Gov's have tried to "ban crypto". It never really works out well for them.

CZ is right about one thing though - if BUSD is deemed a security - although, that is a big IF... then we will see resounding negative impacts across the crypto industry. We are under attack and BUSD is simply one point of contact.

What's the Solution?

So... what's the solution here? How do we keep building out this industry but remain resilient against coordinated efforts like these?

  • More stablecoin options
  • More decentralized stablecoin options

In my opinion, centralized stablecoins absolutely have a role in this crypto ecosystem. With that being said, decentralized options also have a major role to play.

The key to building a resilient economy is to have both and to have more of both. We need to diversify our risk in terms of usage, capital and leverage on all these stablecoins.

Imagine if FTX was the only crypto exchange in the world.. When it blew up, we all would have been completely screwed.

But it wasn't the only one... There are dozens of other CEXes and hundreds of other DEXes out there. Yes, damage was done by losing one of the biggest CEXes, but killing the entire crypto industry was completely out of the question. The risks were diversified and one man couldn't pull down the whole industry with him.

In my opinion, we need to see a similar setup with stablecoins.

Enter DAI
Enter HBD
Enter USDT
Enter USDC

The more options, the better. Obviously, I am a huge fan of both HBD and DAI. I think the Hive-Backed Dollar has a major role that it could fill in the broader crypto ecosystem. Seeing it get more widely adopted is a huge focus of mine.

As a heavy user of MakerDAO, I also firmly believe in DAI and what it offers. I think we'll see continued usage and adoption of DAI. The Spark protocol was recently announced/soft-launched and I think this is another step in the right direction.

As Hivers, let's keep pushing forward with HBD. Some really great changes have been made to the debt system, 20% APR for saving HBD, etc. and all of these changes could position the Hive economy to become a top dog in the crypto ecosystem's future.

About LeoFinance

LeoFinance is a blockchain-based Web3 community that builds innovative applications on the Hive, BSC, ETH and Polygon blockchains. Our flagship application: LeoFinance.io allows users and creators to engage & share micro and long-form content on the blockchain while earning cryptocurrency rewards.

Our mission is to democratize financial knowledge and access with Web3.

Twitter: https://twitter.com/FinanceLeo
Discord: https://discord.gg/E4jePHe
Whitepaper: https://whitepaper.leofinance.io

Our Hive Applications

Join Web3: https://leofinance.io/
Microblog on Hive: https://leofinance.io/threads
LeoMobile (IOS): https://testflight.apple.com/join/cskYPK1a
LeoMobile (Android): https://play.google.com/store/apps/details?id=io.leofi.mobile
Delegate HIVE POWER: Earn 16% APR, Paid Daily. Currently @ 2.8M HP
Hivestats: https://hivestats.io
LeoDex: https://leodex.io
LeoFi: https://leofi.io
BSC HBD (bHBD): https://wleo.io/hbd-bsc/
BSC HIVE (bHIVE): https://wleo.io/hive-bsc/
Earn 50%+ APR on HIVE/HBD: https://cubdefi.com/farms

Web3 & DeFi

Web3 is about more than social media. It encompasses a personal revolution in financial awareness and data ownership. We've merged the two with our Social Apps and our DeFi Apps:

CubFinance (BSC): https://cubdefi.com
PolyCUB (Polygon): https://polycub.com
Multi-Token Bridge (Bridge HIVE, HBD, LEO): https://wleo.io

Posted Using [LeoFinance Alpha]https://alpha.leofinance.io/@khaleelkazi/stablecoin-wars-paxos-ordered-to-stop-minting-busd

Sort:  


The rewards earned on this comment will go directly to the people( @joydukeson ) sharing the post on Twitter as long as they are registered with @poshtoken. Sign up at https://hiveposh.com.

🍕 PIZZA !

I gifted $PIZZA slices here:
@cryptothesis(6/15) tipped @khaleelkazi (x1)

Send $PIZZA tips in Discord via tip.cc!

First SEC came up with this BUSD fud and now circle also filled regularity complaint against binance.

well, The decentralized Stablecoin narrative is surfacing and hopefully people will find out $HBD. I'm more like trying to tell em $HBD exist in these situations kinda perfect time to do it.

Didn't expect this tbh: Binance was pushing BUSD adoption a lot and it was becoming my fav (centralized) stablecoin... but now this looks like another reason to always stay away from CeFi and going full DeFi.

I guess Coinbase too will be doing some work soon, by supporting usdc

Posted Using LeoFinance Beta

The more we have of each, the better. I think they'll circle through all the major centralized stablecoins poking at them to see which falls. The FUD will spread for awhile. Decentralized stablecoins (like $HBD) are the better options for now.

Interesting to see your point of view on this, and this event has been educational.

Posted Using LeoFinance Beta

It's not just BUSD. Next one they might go after is Circle/USDC & also PayPal withdrew its stablecoin plans.

SEC is going for a big time crackdown using some of their guns

I think Coinbase is willing to defend USDC.

Posted Using LeoFinance Beta

I'm not disputing that. Thing is that the SEC needs to pull the plug for stables in order to introduce CBDC more easily.

@tipu curate

One day if there is a healthy selection of decentralised stable coins available, the crypto game would be better! !PIZZA

Congratulations @khaleelkazi! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)

You received more than 74000 HP as payout for your posts, comments and curation.
Your next payout target is 76000 HP.
The unit is Hive Power equivalent because post and comment rewards can be split into HP and HBD

You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

Check out our last posts:

LEO Power Up Day - February 15, 2023
Valentine's Day Challenge - Give a badge to your beloved!
The Hive Gamification Proposal
Support the HiveBuzz project. Vote for our proposal!