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Crypto companies on border as U.S. regulatory crackdown on industry boosts

February 15, 2023: -Digital currency firms are on edge following a flurry of aggressive regulatory acts from U.S. authorities more than the past few days.

Bitcoin was higher at $21,826.68 at around 05:31 a.m. ET, according to CoinDesk data.

Investors are digesting several significant regulatory actions in the U.S. as authorities want to rein in the free-wheeling cryptocurrency industry.

The New York State area of Financial Services stated Paxos to stop minting recent Binance USD, or BUSD, stablecoins. A stablecoin is a digital currency pegging to a real-world asset. Paxos issues BUSD, the third-largest dollar-pegged cryptocurrency. BUSD is pegged in only one with the U.S. dollar.

Real-world reserve assets, like bonds and cash, often back stablecoins. They are used for trading in and out of many cryptocurrencies, as a trader does not need to convert money back to fiat money.

People can get the funds in U.S. dollars or convert BUSD to Paxos’ stablecoin called Pax Dollar (USDP). BUSD remained stable and close to its $1 peg following the New York regulator’s orders. Paxos said BUSD will continue to be redeemable through at least Feb. 2024.

Paxos has confirmed that the Securities and Exchange Commission had notified it that the agency could suggest an action that alleges BUSD is a security and that Paxos is registering the token offering under federal securities law.

The market is waiting to see the similar SEC charges toward Paxos and whether that will affect other stablecoins like USD Coins (USDC) and tether (USDT). There is zero official SEC action against Paxos currently.

Last week, cryptocurrency exchange Kraken finalising with the SEC over blames that it sold unregistered securities.

U.S. regulatory action is being picked up on aspects of the cryptocurrency industry after a year of turmoil that participated almost $1.4 trillion being wiped off the market, along with bankruptcies, failures of projects and firms topped off by the collapse of significant exchange FTX.

Vijay Ayyar, vice president of corporate expansion and international at crypto exchange Luno, stated that there might be a minor collapse in coin prices after the considerable sell-off in the previous year.

“The market is willing to be taking the news well, and that sentiment is remaining cautiously optimistic given that most of the selling in the market is coming more than the last year,” Ayyar told on Tuesday. Investors wait to see what happens next on the regulatory front.

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Crypto companies on border as U.S. regulatory crackdown on industry boosts