Aave Will Remove Stablecoin BUSD, Impact of Problems with SEC?
JAKARTA – The popular decentralized lending protocol, Aave, is considering phasing out BUSD before the token swap closes next year. This was due to the regulatory pressures faced by the BUSD issuer, Paxos, which occurred on Monday.
Marc Zeller, a member of the Aave community and founder of the Aavechain protocol delegation, submitted a new proposal that would freeze Aave's BUSD reserves on the Ethereum market starting in April. This proposal will only allow users to burn BUSD tokens for their underlying value.
Zeller argues that BUSD has no "real growth prospects," and that without the opportunity to mint new tokens, continuing to use them "could undermine the stake and asset peg arbitrage opportunities." He proposes that Aave leave BUSD and invites users to switch to another stablecoin available within Aave's more diverse ecosystem.
If this proposal is implemented, Aave users will have to look for alternative stablecoins to transact within the protocol. Nonetheless, this can reduce Aave's dependence on BUSD, thereby avoiding any risks that may be associated with its issuer, Paxos.
see_also]
- https://voi.id/teknologi/231506/peminjaman-kripto-aave-bekukan-17-token-ini-alasannya
- https://voi.id/teknologi/243785/5-platform-pinjaman-kripto-terkemuka-2023
[/see_also]
Paxos, a financial technology company and issuer of the BUSD stablecoin, has been faced with several challenges recently. BUSD itself is a stablecoin that is backed 1:1 by the US dollar and serves to avoid the volatility that is common with other cryptocurrencies.
Stablecoins themselves play an important role in the decentralized financial ecosystem. It acts as the backbone of the crypto lending and trading market, allowing users to transact without worrying about excessive price fluctuations.
On Monday, Paxos announced that it would stop printing new BUSD units starting February 23, following an order issued by the New York Department of Financial Services (NYDFS). This comes after reports emerged that the Securities and Exchange Commission (SEC) was preparing a lawsuit against Paxos for issuing BUSD as an unregistered security.
The decision to stop minting new BUSD could affect the users and investors who hold this stablecoin, as well as the decentralized financial markets that depend on it. It also points to the growing regulatory pressure on the crypto and blockchain industry as a whole.