financial services using CRYPTOCURRENCIES Matrixport’s head of research is of the opinion that the current investigation of Paxos and its Binance USD (BUSD) token is not an assault on stablecoins itself.

Matrixport’s Markus Thielen noted in a study published on Feb. 14 that BUSD issuer Paxos Trust Company may not have been as harsh with its control of the token as it should have been.

Furthermore, he said that “it doesn’t appear to be stablecoins” as the root of the problem.

According to Thielen’s argument, “Paxos had failed in its commitment to conduct periodic and targeted risk assessment and due diligence of Binance and Paxos-issued BUSD consumers.” Paxos is the company that issues the BUSD tokens.

“As a consequence of multiple outstanding issues related to Paxos’ management of its connection to Binance,” Paxos was ordered by the New York Department of Financial Services (NYDFS) to suspend issuance of BUSD on February 13.

Paxos has also just revealed that the US Securities and Exchange Commission (SEC) sent a notice from Wells to the issuer of the stablecoin on February 3, over the issuer’s alleged failure to register the offer in accordance with federal securities laws.

According to Thielen, BUSD has issued $11 billion worth of tokens on Ethereum, but there is also $4.8 billion worth of Binance-Peg BUSD tokens on the BNB Smart Chain. Binance offers a service for pegged tokens where BUSD is locked on Ethereum and Binance-Peg BUSD is launched on BNB Chain in addition to other blockchains like Avalanche and Polygon.

“It appears that the NYDFS is now concerned that the $4.8 billion is not fully supported or has had a difficult time getting supported 1:1,” he added. “This appears to be a concern on the part of the NYDFS.”

Paxos, on the other hand, said on Feb. 13 that “BUSD tokens created by the Paxos Trust have and always will be backed 1:1 by US dollar-denominated reserves, fully segregated and stored in separate distant accounts.” Paxos made this claim.

Thielen notes that the Jan. 24 event in which Binance mixed client money with collateral could also have been a catalyst for some of the regulatory steps that have been taken.

Some people are still under the impression that other stablecoins could be in jeopardy as a result of the recent steps taken against BUSD.

Paxos has stated of late that there are “categorically no further complaints against Paxos” other than the ongoing controversy surrounding BUSD.

“USDC is a regulated dollar digital currency that was issued as stored value in accordance with United States money transfer legislation,” Circle states.

“The facts and circumstances in any type of regulatory action like this are all different, as are the structural and regulatory considerations with each of the cryptocurrencies that are in circulation around the world,” Disparte added. “The facts and circumstances in any type of regulatory action like this are all different.”

However, Thielen has stressed to those in the industry that they should not be overly anxious about what the future holds for BUSD.

“Binance has shot itself a bit in the foot here, but they are working on it and it should be rectified. The question is: “Should we really be worried?” Thielen said.

“I don’t think that’s the case. Is the peg going to be broken? NO. We are no longer in a bear market, which is characterized by investors being concerned about potential losses; whereas, in bull markets, investors are Investors are more focused on potential earnings.