By Elizabeth Howcroft
LONDON, March 1 (Reuters) - Binance's stablecoin,
Binance USD, has seen around $6 billion of outflows following a
U.S. regulatory crackdown on the company that issues the token,
according to market tracker CoinGecko.
Paxos Trust Company, which issues Binance USD, said on Feb.
13 that the U.S. Securities and Exchange Commission (SEC) had
told the company it should have registered the product as a
security and is considering taking action against the platform.
On the same day, New York's chief financial regulator said
in a consumer alert that it had ordered Paxos to stop creating
the token.
An NYDFS spokesperson later told Reuters via email that
Paxos violated its obligations for "tailored, periodic risk
assessments" and due diligence checks on Binance and Binance USD
customers needed to stop "bad actors from using the platform".
Binance CEO Changpeng Zhao said that the regulator's
decision meant the market cap of the token would decrease over
time.
On Wednesday, the value of all Binance USD was around $10.5
billion, down from $16.1 billion on Feb. 13, according to market
tracker CoinGecko.
The Financial Times reported on Wednesday that investors
have pulled more than $6 billion out of the Binance-branded
token in the past month, citing data from blockchain analytics
firm Nansen.
Analysts said the NYDFS move represented a setback in
Binance's efforts to gain market share from larger stablecoins.
SEC Chair Gary Gensler has previously said he believes some
stablecoins to be securities.
(Reporting by Elizabeth Howcroft; editing by Sinead Cruise and
Jason Neely)
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