The fate of dollar-pegged stablecoins in question: Law Decoded, 13-20 February
New week is a new element in the crypto ecosystem under attack. This time, the United States Securities and Exchange Commission (SEC) ordered Paxos Trust to stop issuing Binance USD (BUSD) – a dollar-pegged stablecoin. Paxos received a stop order from the New York Department of Financial Services (NYDFS).
Left with no other choice, Paxos announced that as of February 21, it would end its relationship with Binance for the labeled US dollar-pegged stablecoin BUSD. All existing BUSD tokens will remain fully supported and redeemable through the Paxos Trust Company until “at least February 2024”. Customers can redeem their funds in US dollars and convert their BUSD tokens to another Paxos-issued stablecoin, the Pax Dollar (USDP). At the same time, the company “categorically disagreed” with the SEC’s view that BUSD is a security.
From dismissing the issue as “FUD” to calling it an attack against the Binance exchange, crypto community members variously theorized about the claims that BUSD is an unregistered security. Cryptoanalyst Miles Deutscher expressed the most obvious point of confusion – no one expects a profit when they buy a stablecoin.
The situation could have far-reaching consequences for stablecoins in general. As Binance CEO Changpeng Zhao has already hinted, the industry could drop the US dollar as a peg currency altogether, switching to the euro, yen or Singapore dollar. However, some experts believe that the scrutiny of Paxos was not a direct attack on stablecoins, but preventive measures 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 crypto-asset securities fraud.” According to the agency, Kwon and Terraform offered and sold an “interconnected package of crypto-asset securities, many in unregistered transactions.” Kwon, a South Korean citizen, is currently at large and believed to be in Serbia after leaving his residence in Singapore sometime in September 2022 after a court in Seoul issued an arrest warrant for him. Interpol reportedly issued a red notice for Kwon to law enforcement worldwide later in September.
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Russia will roll out CBDC pilot with real consumers in April
The Bank of Russia is preparing to roll out the first consumer pilot of the country’s central bank digital currency (CBDC) on April 1, 2023. The upcoming CBDC pilot will involve 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 decide how to further scale the digital ruble. The news comes as some Russian officials claim the Bank of Russia is considering a gold-backed token aimed at cross-border transactions.
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Kansas state lawmakers appear to cap crypto political donations at $100
The topic of crypto campaign donations is undoubtedly something that will come up before the next US election cycle. Still, Kansas state lawmakers are eager to address it head-on. According to a new bill, no person would be allowed to make or accept crypto contributions of more than $100 for any political candidate in the state’s primary or general election. For donations below $100, the recipient must “immediately convert” the crypto to US dollars, not use the crypto for expenses, and not deplete the funds.
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