The Aave community may freeze the BUSD stablecoin

The Aave community may freeze the BUSD stablecoin

Author: Robert Strickland

The Aave community may freeze the BUSD stablecoin

Members of the Aave cryptocurrency community have been actively exploring the possibility of freezing the Binance USD (BUSD) stablecoin on its own platform. Such a proposal came after it became known about the problems of this digital currency. Recall that earlier the New York Financial Department (NYDFS) had banned Paxos from issuing this crypto-asset.

A little later it became known that the leading U.S. financial regulator - the Securities and Exchange Commission (SEC) - planned to sue the issuer of the token. The fact is that the leadership of the organization felt that the Stablecoin could perform the functions of securities, and thus was issued and was in circulation illegally, without passing the licensing of the institution.

A management proposal from Aave community member Markzeller states: since Paxos will no longer issue new BUSD tokens, the issuance of this virtual asset will gradually come to zero. According to the assurance of the expert, this state of affairs could "harm the possibility of arbitrage of asset tethering."

At the same time, the participant noted that, in general, there is no risk for the protocol because of the current situation, but "BUSD has no prospects for growth," Markzeller added.

At the time this news was published, the initiative had received a number of positive responses. Curiously, another member of the community went even further and suggested that Aave should liquidate all of its assets in BUSD to minimize further risks.

Binance BUSD Stablecoin was temporarily losing its peg to the value of the U.S. dollar (USD) today. This was because investors were trying to protect their capital by converting funds into other stablecoins.

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