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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

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. 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.

roflyear 4y ago
Thanks for the explanation, but that is just wild.
saurik 4y ago
I have now read this article, a number of other articles, and--importantly--the NYDFS statement on the matter. Every single reference stresses that regulators agree that PBUSD is separate from BUSD and is not issued by Paxos before noting that it is explicitly not regulated. I thereby do not see any evidence for this theory that the regulators are going after Paxos and forcing them to stop issuing BUSD due to Binance issuing difficult-to-track PBUSD. Further, I will argue that the premise of such an argument is flawed: Binance is itself purposefully not regulated in the United States, and so there are assuredly actors using it to trade whom United States regulators want to blacklist; the result is that merely having BUSD traded on Binance--even without the ability to withdraw it to other chains as PBUSD--already has this "risk" you are speaking about.
- simple-thoughts 4y ago
  To quote the NYDFS press release: “DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance in regard to Paxos-issued BUSD.” They don’t go into details into the unresolved issues, but it’s common knowledge that Binance-Peg BUSD is used as a way to securely hold a backed stablecoin without risk of blacklisting, and that there are some questions around Binance’s management of Binance-Peg BUSD. https://www.dfs.ny.gov/consumers/alerts/Paxos_and_Binance https://www.dfs.ny.gov/consumers/alerts/Paxos_and_Binance

roflyear 4y ago

Thanks for the explanation, but that is just wild.

saurik 4y ago

I have now read this article, a number of other articles, and--importantly--the NYDFS statement on the matter. Every single reference stresses that regulators agree that PBUSD is separate from BUSD and is not issued by Paxos before noting that it is explicitly not regulated. I thereby do not see any evidence for this theory that the regulators are going after Paxos and forcing them to stop issuing BUSD due to Binance issuing difficult-to-track PBUSD. Further, I will argue that the premise of such an argument is flawed: Binance is itself purposefully not regulated in the United States, and so there are assuredly actors using it to trade whom United States regulators want to blacklist; the result is that merely having BUSD traded on Binance--even without the ability to withdraw it to other chains as PBUSD--already has this "risk" you are speaking about.

simple-thoughts 4y ago
To quote the NYDFS press release: “DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance in regard to Paxos-issued BUSD.” They don’t go into details into the unresolved issues, but it’s common knowledge that Binance-Peg BUSD is used as a way to securely hold a backed stablecoin without risk of blacklisting, and that there are some questions around Binance’s management of Binance-Peg BUSD. https://www.dfs.ny.gov/consumers/alerts/Paxos_and_Binance https://www.dfs.ny.gov/consumers/alerts/Paxos_and_Binance