Binance Says Stablecoin Partner Been Told to Stop Minting BUSD

A lot of &quot;stable&quot; coins have always looked a bit shakey, but as long as the music keeps playing no one has to face reality. It doesn&#x27;t matter if the coins aren&#x27;t backed as long as no one asked for the backing. Now with BUSD... there&#x27;s nothing to do left <i>but</i> ask for the money back. They can&#x27;t mint any more so at best there will be a net outflow, at worst people will panic and run for the exit. So this is really going to test whether Binance wants to come up with $16Bn to keep this all afloat.

&gt; Paxos also assured the funds are safe, and fully covered by reserves in their banks.<p>Ahahahaha.<p>Always normal when someone has to state this.

Hey stable coin here! Let me just take your money, deposit away securely and do that with minimum effort.<p>Said no company ever...<p>Instead they take your money, give you some coin and now have your real money and do shit with it.<p>And why? Because operating a company costs money and handling money costs money. And greed

The level of ignorance around stablecoins in the comment section is outstanding. Paxos issues BUSD and USDP both of which are heavily regulated by the state of New York. It’s extremely transparent with regular, high quality audits. The standards of Paxos is much higher than USDC or USDT. For blockchain users, it was the only way to hold a coin that was directly backed by bank reserves.<p>The reasons for this move have nothing to do with lack of backing. It’s because Binance holds a lot of BUSD, which it then uses to issue Binance-Peg BUSD which is a completely different token and does not have the same degree of transparency or auditability. More seriously for regulators, the smart contract for Binance-Peg BUSD does not have a method for blacklisting accounts, unlike BUSD’s smart contract. This meant that actors on non ethereum chains could access stablecoins backed by BUSD but without the risk of being blacklisted by regulators.

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Also see this thread:<p>“Crypto Firm Paxos Faces SEC Lawsuit over Binance USD Token”<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=34769460" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=34769460</a><p>Edit: Coindesk has shared the details of The Wall Street Journal’s reporting:<p>&gt; “Following the news of the SEC&#x27;s legal action, Binance issued a statement that it would be reviewing projects in uncertain markets where regulatory uncertainty could cause detriments to its users.<p>&gt; “The NYDFS said that it had instructed Paxos to cease minting BUSD due to several unresolved issues related to Paxos’ oversight of its relationship with Binance. Paxos said it is ending its relationship with Binance for BUSD.”

&gt; As a result, BUSD market cap will only decrease over time<p>Am I correct that this matches what you would expect them to say if they didn&#x27;t have enough to cover the money going out?<p>Similar to the when Mr. Ponzi (the original) first announced that his investments were doing poorly; that he would only be returning 90 cents on the dollar, before he saw a run on the cash and decided to split town?

Any reason why wouldn&#x27;t they want this stable coin to be created anymore? Moving to something else? Or is there some issue with it?

Claiming a stable coin is a security, when it is offered specifically NOT to offer any return, seems like a stretch...

Not that I mind the comeuppances that are coming up, but I do wonder if the new generation of tulip traders could have saved a lot of trouble by labeling everything &quot;FOR ENTERTAINMENT PURPOSES ONLY&quot;. Only then you probably run into gambling regulators, who if anything are even more suspicious of their regulatees than financial regulators.