From the ‘Wild West’ analogue of the early days, the cryptocurrency market has matured and morphed into a vastly regulated space. This evolution has been driven, in many parts, by the realisation that cryptocurrencies have value and that value needs protection. An inimitable reflection of this shift is the recent declaration by Binance, a well-known cryptocurrency exchange, stating that it will “gradually” discontinue support for its BUSD stablecoin. This leaves users with the task of converting their BUSD into other assets by February in the coming year.
The decision by Binance dwells beneath more than just a surface-level change. The announcement seems steeped in the reality that the regulatory landscapes over cryptocurrencies and exchanges continue to grow more stringent. One may look at the pivot as a downside – a restrictive space that limits the once uninhibited freedom that cryptocurrency promised at its dawn. On the other side of the coin, the increasing regulation provides an added layer of legitimacy to the nascence of this technology.
Binance’s assurance that BUSD will always be backed 1:1 by USD, suggests that they are not stepping into the grey. Instead, they look to create a more defined space, a move that could aid in reinforcing the trust users place on them.
With these new regulatory structures, the once unthinkable – a clash between a cryptocurrency and regulatory authority, has unfolded. In the case of BUSD, the trouble was stirred up when Paxos, the stablecoin issuer, was directed by the New York Department of Financial Services (NYDFS) to halt its production. The episode attests to the reality that regulatory directives are becoming a significant determinant of the directions cryptocurrencies might take.
Yes, the space feels less adventurous. But isn’t security, a sense of stability, and trust what the market really needs to continue its growth? For the critics, yesterday’s uncontainable new kid on the financial block is becoming today’s ordinary, regulated instrument of commerce. The smooth-in-gums might perceive this as a loss of charm and originality; the gimlet-eyed might see this as the inevitable next chapter in a blockchain-enabled future.
While this conversation continues, all eyes remain on the imminent changes set to unfold within the next few months. As we wait for February to see the cessation of BUSD from spot and margin trading pairs, this one decision reshapes the narrative for cryptocurrencies, transforming them into a more safeguarded class of investment instruments.
Source: Coindesk
