Advances for cryptos in mainstream financial markets has not been an easy task. On a federal level, cryptos have had their fair share of issues with the SEC (US Security and Exchange Commission). Perhaps dealing with government regulators on the state level is the better way to go.
Originally posted on Decrypt and re-posted on Yahoo Finance, crypto exchange giant Binance was in the news. It recently gained approval for its plan to launch BUSD as a stablecoin backed by the US dollar. This is a partnership with stablecoin provider Paxos. It just received regulatory approval from The New York State Department of Financial Services (NTDFS). The offering will only be valid for New York residents.
Later in September, the coin will commence trading on the Paxos and Binance exchange platforms. Paxos will issue the coin and manage the dollar reserves. Customers of this exchange can trade the coin in terms a real US dollars. On the Binance exchange, BUSD will trade against top cryptos such as Bitcoin (BTC). It will also be traded against Ripple (XRP) and Binance Coin (BNB).
Changpeng Zhao is the CEO of Binance. He issued the following statement in a recent company press release:
“We hope to unlock more financial services for the greater blockchain ecosystem through the issuance of BUSD. Including more use cases and utility through the power of stable digital assets.”
New York has one of the strictest financial regulatory environments in the investment industry. This approval is a major accomplishment for Binance ahead of its US launch. It also demonstrates a level of cooperation with government regulators. This is the role that Paxos played in this project.
This does not mean that the upcoming Binance US platform will be available in New York. The company would still need a BitLicense to operate. However, it does help to provide the Paxos exchange with a US-dollar stablecoin that can be used by consumers.
Paxos CEO Rich Teo was quoted as saying: “NYDFS’s approval of BUSD is a vital step towards long term stability in global crypto markets.”
BUSD will not be the first stablecoin on the Binance exchange. Its native blockchain has StableUSD and a GBP-backed stablecoin known as Binance GBP.
Along with company plans to expand its stablecoin offerings, Binance continues to develop Venus. This is an initiative to create multiple stablecoins for itself and other companies on a Binance Chain. Venus has been described as an ‘independent, regional version” of Facebook’s Libra project.
Paxos also remains active in new initiatives. The company recently announced it was launching its own stablecoin backed by gold. It will run with the Ethereum crypto network. However, instead of being redeemable for US dollars, it will be traded against gold stored in a London vault. Currently, Paxos has its own dollar-backed stablecoin running as a token on the ETH network.
More arrangements between cryptos and stablecoins as financially backed investments should take place in the near future. These can be seen as gateways between the world of cryptocurrency and mainstream financial markets.