In mid-February, the NYDFS ordered the suspension of BUSD issuance, signaling the suspension of the partnership between Paxos and Binance. For Binance, this decision is quite compromising for its activities. Because the stablecoin BUSD is one of the major projects on which the crypto firm is counting. Some wonder if the company could survive the demise of the stablecoin for long.
Two possible scenarios
The recent order for Paxos to stop issuing the BUSD stablecoin continues to cause concern. Several players in the crypto industry are worried about the implications of this decision for the market and for Binance. Their concerns are well founded in a certain way. Indeed, since the crypto company is in conflict with the Securities and Exchange Commission (SEC), the market capitalization of BUSD has collapsed.
Between November 2022 and March 2023, the latter fell from $23.04 billion to $9.17 billion. A sinking of 60% which questions Binance’s ability to adapt to this change. This, without affecting an already strained crypto market with the bear market and a fuzzy regulatory program.
Two options present themselves for Binance
For Adam Cochran, Partner at Metacartel Ventures, Binance would only have two possibilities in the current situation. Or, the company is keeping a low profile by agreeing to pay a penalty to revive the asset. Either, if it refuses and agrees to submit to the SEC, thereby recognizing the movable nature of BUSD. Either way, the consequences would be detrimental to industry and society.
Indeed, in the first case, Binance would open a boulevard at the SEC to attack all exchanges. The second case would be more devastating.
“If BUSD is determined as a security by the regulator, Binance will be subject to additional oversight and regulation on the stablecoin. The crypto exchange would then have to comply with strict SEC rules to issue BUSD on its platform »said David Kemmerer, CEO of CoinLedger recently.
Anyway, Binance plays big in this business. This, because a potential crisis of user confidence could affect its results in the stablecoin market in the short term.
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