Bloomberg reported that Circle, the issuer of the USDC stablecoin, filed a complaint to the regulator New York State Department of Financial Services (NYDFS) about the Binance USD (BUSD) coin not being fully backed. Yesterday it was announced that Paxos would stop issuing new BUSD at the instruction of NYDFS.
The Circle complaint probably did not relate to the Paxos-issued coin on Ethereum, but instead the Binance-issued pegged BUSD stablecoin on other chains.
The saga raises issues about the importance of stablecoin competition. Additionally, the SEC is targeting BUSD, saying Paxos issued a security. We explore why the SEC might perceive Paxos as less likely to fight.
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