Stablecoins not the target in BUSD crackdown: Matrixport head of research
Crypto financial services Matrixport's head of research believes the recent scrutiny of Paxos and its Binance USD (BUSD) token is not a direct attack on stablecoins themselves.
In a Feb. 14 analysis, Matrixport's Markus Thielen suggested that Paxos Trust Company, the issuer of the Binance USD (BUSD), may not have been stringent enough with its oversight of the token.
He added that the issue "does not appear to be around stablecoins" in itself.
"Paxos had violated its obligation to conduct tailored, periodic risk assessment and due diligence of Binance and Paxos-issued BUSD customers," Thielen argued.
On Feb. 13, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD "as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance"
Paxos also recently confirmed that on Feb. 3, the United States Securities and Exchange Commission (SEC) sent a Wells notice to the stablecoin issuer over its alleged failure to register the offering under federal securities laws.
Thielen notes that BUSD has issued $11 billion on Ethereum, but $4.8 billion is also accounted for to be issued on the Binance Smart Chain, in a tokenized version of BUSD.
"It appears that NYDFS is now worried that the $4.8 billion might not be properly backed or have had issues with being 1:1 backed," he said.
However,Paxos has stated as recently as Feb. 13, that, “BUSD tokens issued by Paxos Trust have and always will be backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts.”
In a statement to Cointelegraph, Binance reiterated this stance, saying, "BUSD is a 1 to 1 backed stablecoin that is one of the most transparent stablecoins in existence.”
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