Cash-Backed (Custodian) Stablecoins

The End of USD Stablecoins?

With Paxos shutting down BUSD after the SEC alleged it’s a “security”, CZ says Binance are exploring alternative issuers — and perhaps even non-USD stablecoins. With Binance’s user base, stablecoin issuers should be running after the opportunity to be the exchange’s de-facto stablecoin. However, the possibility for the new issuer to have a similar outcome to Paxos isn’t out of the question.

A lot of commentators are speculating that the SEC’s actions were intended to take a dig at Binance rather than stablecoins. One piece of the story supporting this is that the SEC specifically targeted BUSD — a Paxos-issued, Binance-branded stablecoin — while Paxos’ own USD stablecoin doesn’t seem to be affected. So if the goal truly is to target Binance, it would likely mean other USD stablecoin issuers will want to keep their distance.

If there’s one entity in crypto with a large enough userbase to bring a massive shift to market structure, it’s Binance. And if they manage to establish a means of issuing their own stablecoin pegged to a large, non-USD currency (like EUR or GBP), that could potentially threaten the dollar’s status as the de-facto MoE/SoV for on-chain markets.

Either way, we should have confirmation of the SEC’s intent over the next few weeks if they decide to pursue action against other stablecoin issuers — like Circle and Gemini — as well.

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