Crypto Industry At A Crossroads: Top Experts React To SEC's Paxos Action On Binance USD

The Securities and Exchange Commission's direction to Paxos to cease issuing new units of Binance's dollar-pegged cryptocurrency Binance USD BUSD/USD, has triggered reactions from industry experts, who believe that staking yield should not be considered a security.

Slava Demchuck, CEO of AMLBot stated that stablecoin issuer Circle USDC/USD currently has the most advanced compliance framework built into the USDC token, which he believes will lead to fewer regulatory hurdles in the future.

However, he added that the other mentioned tokens can expect constant attacks and significant fines, as seen with Tether USDT/USD.

Demchuck also predicted that stablecoins will either have to fit a clear paradigm set by regulators or face being shut down.

Stanislav Havryliuk, COO at Zonda stated that the SEC’s increased pressure on the crypto market is due to the recent FTX FTT/USD situation.

He added that reaching an agreement between U.S. regulators and the crypto industry may take some time, but the outcome will ultimately benefit all parties involved, with safety as a priority.

Havryliuk also noted that USDC is the safest stablecoin due to its rigorous auditing and licensing requirements, and it covers more networks than BUSD, so he expects regulators to treat them differently.

Chen Zhuling, founder and CEO of RockX, a staking solutions provider, disagrees with the SEC’s decision, arguing that staking yield should not be considered a security and that staking helps to maintain the blockchain and incentivizes users with tokens.

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Zhuling also noted that US-based platforms may switch to a non-custodial staking model, and this decision could help to reduce centralization across Ethereum ETH/USD and other PoS networks.

He also predicted that Asian staking providers will have a unique opportunity to offer more sustainable solutions and innovations in the space.

Binance founder Changpeng Zhao on Monday confirmed that Paxos was directed by New York's state financial regulator to stop creating new BUSD stablecoins.

However, Paxos indicated that its own stablecoin was not impacted, but it did receive notification of potential charges from the Securities and Exchange Commission regarding its BUSD product.

This regulatory move is the latest attempt to control the once-unregulated cryptocurrency industry.

Last week, the Securities and Exchange Commission settled with Kraken over allegations of unregistered offerings and sales related to its crypto-staking platform.

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