The fate of dollar-pegged stablecoins in question: Law Decoded, Feb. 13–20

New week, a new element of the crypto ecosystem is under attack. This time around, the US Securities and Exchange Commission (SEC) has ordered Paxos Trust to stop issuing Binance USD (BUSD), a dollar-pegged stablecoin. Paxos has been ordered to cease operations by the New York City Department of Financial Services (NYDFS).

No other choice Paxos announced that from February 21, it will terminate its relationship with Binance regarding the BUSD branded stablecoin pegged to the US dollar. All existing BUSD tokens will remain fully collateralized and redeemable through Paxos Trust Company “until at least February 2024.” Customers can redeem their USD funds and convert their BUSD tokens into another Paxos-issued stablecoin, the Pax Dollar (USDP). At the same time, the company “strongly disagreed” with the SEC’s opinion that BUSD is a security.

Members of the crypto community have come up with various theories regarding accusations that BUSD is an unregistered security, from ignoring the issue as “FUD” to naming an attack on the Binance exchange. Crypto analyst Miles Deutscher expressed the most obvious bewilderment – no one expects a profit when buying a stablecoin.

The situation could have far-reaching implications for stablecoins in general. As Binance CEO Changpeng Zhao has already hinted, the industry can completely abandon the US dollar as a peg currency by switching to the euro, yen or Singapore dollar. However, some experts believe that the Paxos check was not a direct attack on stablecoins, but, in particular, preventive actions against Paxos.

SEC sues Do Kwon and Terraform Labs for fraud

The SEC has filed a lawsuit against Terraform Labs and its founder Do Kwon for allegedly “managing a multi-billion dollar cryptocurrency securities fraud.” According to the agency, Kwon and Terraform were offering and selling “an interconnected set of crypto-asset securities, many of which were in unregistered transactions.” Kwon, a South Korean citizen, is currently at large and is believed to be in Serbia after leaving his residence in Singapore sometime in September 2022 after a Seoul court issued a warrant for his arrest. At the end of September, Interpol reportedly sent a red notice about Kwon to law enforcement agencies around the world.

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Russia to launch CBDC pilot project for real consumers in April

The Bank of Russia is preparing to launch the first consumer pilot project of the country’s central bank digital currency (CBDC) on April 1, 2023. The upcoming CBDC pilot project will include real operations and real consumers in Russia, but will be limited to a certain number of transactions and customers. Based on the results of the first pilot stage, the Bank of Russia plans to determine ways to further scale up the digital ruble. The news comes amid claims by some Russian officials that the Bank of Russia is considering issuing a gold-backed token for cross-border transactions.

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Kansas State Lawmakers Hope to Limit Crypto Political Donations to $100

The topic of cryptocurrency campaign donations will no doubt be brought up before the next election cycle in the United States. However, Kansas state legislators are keen to address the issue early. Under the new bill, no one will be allowed to make or accept crypto contributions greater than $100 to any political candidate in a state primary or general election. For donations of less than $100, the recipient will be required to “immediately convert” the cryptocurrency into USD, not use the cryptocurrency for spending, and not hold the funds.

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