Questioning the Fate of Dollar-pegged Stablecoins: Law Decoded, 13-20 February

Editor February 20, 2023

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#Questioning #Fate #Dollarpegged #Stablecoins #Law #Decoded #February Welcome to InNewCL, here is the new story we have for you today:

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New week, a new element of the crypto ecosystem is under attack. This time, the United States Securities and Exchange Commission (SEC) has ordered Paxos Trust to stop issuing Binance USD (BUSD) — a dollar-pegged stablecoin. Paxos received a cease and desist order from the New York Department of Treasury (NYDFS).

Paxos had no choice and announced that starting Feb. 21, it would end its relationship with Binance for US dollar-pegged branded stablecoin BUSD. All existing BUSD tokens will remain fully secured and redeemable through Paxos Trust Company until “at least February 2024”. Clients can redeem their funds in US dollars and exchange their BUSD tokens for another Paxos-issued stablecoin, Pax Dollar (USDP). At the same time, the company “categorically” disagreed with the SEC’s position that BUSD was a security.

From dismissing the issue as “FUD” to labeling it an attack on the Binance exchange, members of the crypto community have offered various theories regarding the claims that BUSD is an unregistered security. Crypto analyst Miles Deutscher voiced the most obvious point of confusion — nobody expects to make a profit when buying a stablecoin.

The situation can have far-reaching implications for stablecoins in general. As Binance CEO Changpeng Zhao has already hinted at, the industry could drop the US dollar as a peg currency altogether and switch to the euro, yen or Singapore dollar. However, some experts believe that the Paxos review was not a direct attack on stablecoins, but rather a preventive measure against Paxos in particular.

SEC sues Do Kwon and Terraform Labs for fraud

The SEC has filed a lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “orchestrating a multi-billion dollar cryptocurrency fraud.” According to the agency, Kwon and Terraform offered and sold a “connected suite of crypto-asset securities, many in unregistered transactions.” Kwon, a South Korean citizen, is currently at large and is believed to be in Serbia, having left his Singapore residence sometime in September 2022 after a Seoul court issued an arrest warrant for him. Interpol reportedly issued a Red Notice on Kwon to law enforcement agencies around the world later in September.

Russia to launch CBDC pilot with real consumers in April

The Bank of Russia is preparing to launch the first consumer pilot for the country’s central bank digital currency (CBDC) on April 1, 2023. The upcoming CBDC pilot will include real operations and real consumers in Russia, but will be limited to a certain number of transactions and customers. After the first pilot phase, the Bank of Russia plans to determine how to further scale the digital ruble. The news comes amid some Russian officials who are claiming that the Bank of Russia is considering a gold-backed token aimed at cross-border transactions.

Kansas state lawmakers want to limit cryptopolitical donations to $100

The issue of campaign donations in crypto is undoubtedly something that will emerge ahead of the next election cycle in the United States. Still, Kansas state legislators are keen to deal with it beforehand. According to a new bill, no one will be allowed to make or accept crypto donations greater than $100 to any political candidate in the state primary or general election. Donations under $100 would require the recipient to “instantly convert the crypto to US dollars”, not use the crypto for spending, and not hoard the funds.