Revealing over the weekend, restrictive decisions by US regulators on stablecoin BUSD sparked a wave of immigration in the market. On-chain data shows institutional players are moving away from stablecoins amid growing concerns. Here is the latest situation in the altcoin market.
On-chain data shows an institutional investor has moved from this altcoin project
Etherscan data shows that one of the major Bitcoin holding companies is constantly withdrawing USDC from Circle and transferring it to Binance. According to the whale’s last 25 transactions on Etherscan, the total output was $450 million. On Twitter, crypto analytics account Lookonchain reported that before the US Securities and Exchange Commission’s (SEC) final action against the company, the same investor had withdrawn a large amount of BUSD from Paxos.
Twitter’s Frank Fox commented that these large withdrawals, which came at the right time, proved that institutions and funds had inside information about everything. The crypto researcher added that large investors will use individual investors “as exit liquidity whenever they get a chance.”
Clear evidence showing all these institutions and funds have insider knowledge on everything. They will use you as exit liquidity every chance they get. Don't get it twisted, you're up against powerful people when investing the markets. Be smart and be aware.#bearmarket #crypto https://t.co/bqzQ6WTfL6
— Frank Fox 🦾🦊 (@0xfrankfox) February 14, 2023
Paxos is on the radar of US regulators
On February 12, The Wall Street Journal reported that the SEC will file a lawsuit against BUSD stablecoin maker Paxos; this document is a document used to inform businesses about an upcoming enforcement action. The notice claimed that Binance USD (BUSD) is an unregistered security.
However, Binance CEO Changpeng Zhao has previously argued that Paxos is covered by the New York Department of Financial Services (NYDFS) regulation. Additionally, in a report, a Paxos spokesperson disagreed with the SEC’s belief that BUSD is a security token and stated that the firm would vigorously sue the issue if challenged. cryptocoin.com We have mentioned that BUSD lost its price stability in the middle of the developments. It announced on Paxos that it will stop printing BUSD from February 21.
7/ Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.
— CZ 🔶 Binance (@cz_binance) February 13, 2023
NYDFS hit BUSD via Paxos
The US New York Department of Financial Services ordered Paxos on Sunday to cease production of Binance USD. It also appears to be preparing to take action on this as well, as the SEC has sent a Wells Notice to Paxos. Paxos says it “categorically disagrees” with the SEC and insists that BUSD is not a security.
Currently, $15.9 billion worth of BUSD is in circulation. Binance CEO Changpeng Zhao said that the exchange will continue to support it while reducing confidence in BUSD. Paxos said that BUSD can be cashed out through the Paxos Trust by 2024.
6/ "IF" BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.
— CZ 🔶 Binance (@cz_binance) February 13, 2023
Paxos will continue to issue its other stablecoin, the Pax Dollar (USDP). This stablecoin continues to be in circulation with a total supply of $870 million.
