In February, U.S. regulators forced New York-based Paxos Trust Company to stop issuing Binance's stablecoin. Binance, the largest cryptocurrency exchange in the world, has now embraced a stablecoin issued out of Hong Kong, sparking concerns that the actions of U.S. regulators are threatening the hegemony of the U.S. dollar and the U.S.'s position as a global financial leader.
"Binance had a regulated onshore stablecoin issued by a NY Trust company, but the regulators shut it down. Now Binance is embracing a new offshore stablecoin issued out of China, and those same people are crying 'market manipulation.' You can't have it both ways," Omid Malekan, an adjunct professor at Columbia Business School and the author of "The Story of the Blockchain: A Beginner's Guide to the Technology That Nobody Understands," wrote in an Aug. 24 post on X, formerly known as Twitter.
The New York Department of Financial Services (NYDFS) issued a consumer alert in February stating that it ordered Paxos to stop issuing Binance USD (BUSD), Reuters reported. Paxos then announced that the U.S. Securities and Exchange Commission (SEC) notified Paxos that it should have registered BUSD as a security and may face an enforcement action for failing to do so. Paxos stated that BUSD is not a security and said it is "prepared to vigorously litigate if necessary."
In May, First Digital Group announced the launch of a new U.S. dollar-backed stablecoin to be issued by Hong Kong-registered First Digital Trust, CoinDesk reported. The new stablecoin, FDUSD, is backed by “high-quality reserves” of fiat currency in regulated financial institutions across Asia, First Digital said.
In July, Binance announced that it would list FDUSD and waive trading fees for BTC/FDUSD, CoinDesk reported.
Austin Campbell, a managing partner of Zero Knowledge Consulting, responded to Malekan's post saying, "This trend is worse than Omid thinks for the US regulators. Not only will these things be out of their reach (because they kicked them out), but the fastest growing ones are onshore in the BRICS! US can't enforce, but China/Russia can, and the US chose this path."
Ambre Soubiran, the CEO of Paris-based Kaiko, a crypto market data provider, predicted in April that the U.S.' regulation-by-enforcement approach will push the crypto industry to Hong Kong, which has been moving forward with a plan to become a global hub for crypto innovation, CoinTelegraph reported. “The U.S. being more stringent these days than ever on crypto and Hong Kong regulating in a more favorable way…is going to clearly shift the center of gravity of crypto assets trading and investments more towards Hong Kong," Soubiran said in an interview.
The BRICS alliance, which includes Brazil, Russia, India, China, and South Africa, has received applications from more than two dozen countries looking to join, Watcher Guru reported. The growing list of countries seeking to join the bloc could result in a "demotion" of the U.S. dollar from its status as the world's reserve currency.