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The New York Department of Financial Services (NYDFS) has reportedly ordered blockchain company Paxos Trust to stop the issuance of dollar-pegged BINANCE USD () stablecoin.
The New York regulator’s actions come shortly after the United States Securities and Exchange Commission (SEC) issued a wells notice to Paxos — a letter the regulator uses to tell companies of planned enforcement action. The alleged notification that binance usd is an unrecorded value.
Nydfs would have asked paxos to stop creating over his bus token. Paxos will continue to handle product buybacks, based on a binary declaration.
The latest regulatory measure on the third largest stablecoin comes in the wake of the increasing examination around the crypto market. The SEC declared that crypto staking services violate securities law only last week, forcing Kraken to close its staking offering altogether. Coinbase is taking up the fight, claiming its staking products are not securities.
The securities debate in the crypto market is long-running and has been in focus ever since SEC filed a lawsuit against Ripple, the issuer behind the XRP () token. The case has yet to reach a conclusion. Generally, whether an investment of money is made in a company in the hope of making a profit through the efforts of a person other than the investor, it is deemed to be a title.
However, safety claims against a stablecoin might present a major challenge for the crypto industry, as stablecoins are a popular ramp for users to take their first steps into crypto. Cointelegraph came in contact with legal experts to understand how stablecoins might qualify as safety. A lawyer stated that although the stables are expected to be stable, buyers can potentially benefit from a range of arbitration, coverage and staking.
Blockchain attorneys told Cointelegraph that while the answer isn’t clear-cut, there is a case to be made if the stablecoin was created with the expectation of making money or if it is a derivative of a security.
This is an evolving story, and more details will be added as they become available.
