{"id":74132,"date":"2023-02-15T15:06:12","date_gmt":"2023-02-15T13:06:12","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=74132"},"modified":"2025-09-09T18:20:43","modified_gmt":"2025-09-09T15:20:43","slug":"opinion-pressure-on-busd-does-not-pose-risks-to-other-stablecoins","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/opinion-pressure-on-busd-does-not-pose-risks-to-other-stablecoins\/","title":{"rendered":"Opinion: Pressure on BUSD does not pose risks to other stablecoins"},"content":{"rendered":"<p>Regulators are not targeting all \u201cstablecoins\u201d, applying harsh measures against Paxos, the issuer of Binance USD (BUSD). This was stated by Marcus Tillen, head of research at Matrixport&#8217;s crypto-financial services division.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">2\/ \ud83d\udcc9 In the past 24 hours, <a href=\"https:\/\/twitter.com\/hashtag\/BNB?src=hash&#038;ref_src=twsrc%5Etfw\">#BNB<\/a> has dropped -6%, and around $2.4bn of shorts have been put on. But the issue does not appear to be around <a href=\"https:\/\/twitter.com\/hashtag\/stablecoins?src=hash&#038;ref_src=twsrc%5Etfw\">#stablecoins<\/a> per se, what the market initially feared, but rather that <a href=\"https:\/\/twitter.com\/hashtag\/Paxos?src=hash&#038;ref_src=twsrc%5Etfw\">#Paxos<\/a> was not stringent enough with its oversight of the <a href=\"https:\/\/twitter.com\/hashtag\/BUSD?src=hash&#038;ref_src=twsrc%5Etfw\">#BUSD<\/a>.<\/p>\n<p>\u2014 Matrixport (@realMatrixport) <a href=\"https:\/\/twitter.com\/realMatrixport\/status\/1625397104586924032?ref_src=twsrc%5Etfw\">February 14, 2023<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The specialist noted that the asset [BUSD] may have been monitored insufficiently, and that the problem itself, \u201capparently, is not related to stablecoins in general,\u201d he added.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cPaxos violated its obligation to conduct an individual periodic risk assessment and due diligence of Binance and BUSD customers issued by the company,\u201d<\/em> \u2014 Marcus Tillen explained.<\/p>\n<\/blockquote>\n<p>On February 10, the <span data-descr=\"New York State Department of Financial Services\" class=\"old_tooltip\">NYDFS<\/span><a href=\"https:\/\/forklog.com\/en\/news\/bloomberg-new-york-regulator-opens-investigation-into-paxos\"> initiated an investigation<\/a> into Paxos. The regulator later ordered the firm to halt issuing the exchange-linked stablecoin.<\/p>\n<p>The company said it would halt the asset&#8217;s issuance but would continue to support buyback and conversion operations at least until February 2024. The NYDFS<a href=\"https:\/\/forklog.com\/en\/news\/new-york-regulator-explains-paxos-decision\"> explained<\/a> its actions as due to insufficient collateral backing Binance USD.<\/p>\n<p>It also emerged<a href=\"https:\/\/forklog.com\/en\/news\/sec-warns-paxos-of-enforcement-action-reports-say\"> of threats<\/a> <span data-descr=\"U.S. Securities and Exchange Commission\" class=\"old_tooltip\">SEC<\/span> to sue Paxos over securities-law violations in issuing BUSD.<\/p>\n<p>Tillen explained that 11 billion Binance USD have been issued on the Ethereum network. In the blockchains BNB Smart Chain there is also BUSD with a total market value of $4.8 billion pegged to its copy on the network of the second-largest cryptocurrency by market capitalization. Similar analogues also exist on the Avalanche and Polygon blockchains.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cIt appears that the NYDFS is concerned that these assets, worth $4.8 billion, may not have been properly collateralised or there were issues maintaining the peg,\u201d<\/em> \u2014 he suggested.<\/p>\n<\/blockquote>\n<p>The expert reminded that on February 13 Paxos said that \u201cthe BUSD issued by it was and always will be backed by reserves denominated in US dollars, on a 1:1 basis, fully segregated and held in separate accounts.\u201d The company stressed that, besides issues regarding Binance USD, there are \u201cno charges\u201d against Paxos.<\/p>\n<p>The expert did not rule out that regulators may have also reacted to the January 24 incident when it became known that the exchange mixed customer funds with collateral.<\/p>\n<p>Tillen expressed optimism about the exchange-linked stablecoin.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cBinance shot itself in the foot a little here, but they are working on it and they should be able to resolve this issue. So should we really worry? I don\u2019t think so. Is there a decoupling of BUSD from USD? No. We are no longer in a bear market where you worry about downside; in a bull market you focus on the upside,\u201d<\/em> \u2014 he concluded.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">10\/ \ud83d\udea8 <a href=\"https:\/\/twitter.com\/hashtag\/Binance?src=hash&#038;ref_src=twsrc%5Etfw\">#Binance<\/a> has shot itself a little bit in the foot here but they are working on it and it should be resolved. So should we be really worried? I don\u2019t think so. We are no longer in a <a href=\"https:\/\/twitter.com\/hashtag\/bearmarket?src=hash&#038;ref_src=twsrc%5Etfw\">#bearmarket<\/a> where you worry about downside, in <a href=\"https:\/\/twitter.com\/hashtag\/bullmarkets?src=hash&#038;ref_src=twsrc%5Etfw\">#bullmarkets<\/a>, you focus on the upside.<\/p>\n<p>\u2014 Matrixport (@realMatrixport) <a href=\"https:\/\/twitter.com\/realMatrixport\/status\/1625397127043231744?ref_src=twsrc%5Etfw\">February 14, 2023<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Earlier, Bloomberg wrote about Circle<a href=\"https:\/\/forklog.com\/en\/news\/bloomberg-circle-complains-to-nydfs-about-binances-stablecoin\"> complaint to the NYDFS regarding the quality of BUSD reserve management. The co-issuer of the competing asset USDC pointed to the alleged insufficient backing of BUSD.<\/p>\n<p>Earlier, a similar shortcoming was noted by ChainArgos founder Jonathan Reiter.<\/p>\n<p>Binance CEO Changpeng Zhao forecast an expansion in the number of non-dollar stablecoins.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Regulators are not targeting all &#8216;stablecoins&#8217;, applying harsh measures against Paxos, the issuer of Binance USD (BUSD). This was stated by Marcus Tillen, head of research at Matrixport&#8217;s crypto-financial services division.<\/p>\n","protected":false},"author":1,"featured_media":74133,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1625,989,807],"class_list":["post-74132","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-binance-usd-busd","tag-matrixport","tag-stablecoins"],"aioseo_notices":[],"amp_enabled":true,"views":"27","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/74132","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=74132"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/74132\/revisions"}],"predecessor-version":[{"id":74134,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/74132\/revisions\/74134"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/74133"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=74132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=74132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=74132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}