In mid-February, the NYDFS brought down the hammer on BUSD issuance – a significant blow to Paxos and Binance’s partnership. With their stablecoin project as one of its major initiatives, many question whether this decision could be fatal for Binance in the long run. As they face what may become an irreversible situation, will their business prevail?
Binance’s Stablecoin BUSD Declined Sharply
The current order to suspend the issuance of Paxos’ BUSD stablecoin has been a cause of alarm throughout the crypto world. Understandably, many are anxious about what this could mean for the market and its prominent player: Binance. It is true that since they’ve had a conflict with SEC, it’s caused an immense downturn in their market capitalization rate; however, we can hope that further developments will have more positive implications for all involved parties.
Between November 2022 and March 2023, Binance’s total market capitalization plummeted precipitously from $23.04 billion to a mere $9.17 billion – an astonishing drop of 60%. This drastic decrease in value raises doubts about the exchange’s capacity to variate amid these tumultuous times for the crypto markets, which are already beset by bearish trends and disconcerting regulatory frameworks.
According to Analysts, Binance Has Two Options
Adam Cochran, Partner at Metacartel Ventures, believes that Binance has two potential paths in the current situation. On the one hand, it could choose to pay the penalty and regain access to its asset. Or on the other hand, if it decides not to comply with SEC regulations by allowing for the movable nature of BUSD, then tremendous consequences will befall both industry and society alike. The first possible outcome would give an invitation card to SEC authorities enabling them to attack all exchanges when they deem fit, while the latter option is far more damaging in terms of scope as well as magnitude.
According to CoinLedger CEO David Kemmerer, if the regulator determines that BUSD is security, then Binance would be subject to greater oversight and compliance with the SEC’s rigorous regulations. In other words, Binance has an enormous stake in this endeavor, as any potential user confidence crisis could have dire consequences for its results in the stablecoin market.
