Explained: How Binance's stablecoin BUSD can be a security
The Securities and Exchange Commission (SEC) left many scratching their heads when it designated BUSD, a so-called stablecoin, as an unregistered security. The commission’s reasoning is complex yet intriguing — and raises questions about the classification of other stablecoins. The SEC has explicitly classified dozens of digital assets as SEC urities, including many ICOs like cardano (ADA), solana (SOL), ripple (XRP), algorand (ALGO), tron (TRX), and filecoin (FIL). Interestingly, commissioners also classified Terra (UST), the failed stablecoin associated with Do Kwon’s Terra Luna (LUNA), as an investment contract. Many observers dismissed this securities classification without much thought, due to UST’s obvious collapse and algorithmic dependence on the hyperinflationary LUNA token. However, the SEC turned heads on Monday when it classified another stablecoin which still trades near $1 as an unregistered security: Binance’s BUSD. The stablecoin’s ecosystem...