Coinbase Explains Stablecoins

The cryptocurrency exchange platform Coinbase has published a series of tweets giving its perspective on stablecoins, providing a good summary and insight about them ¹.

The context is the decision by the New York state Department of Financial Services (NYDFS) to order Paxos to stop issuing the US dollar-denominated stablecoin BUSD and the Securities and Exchange Commission (SEC) to issue Paxos with a Wells notice. Paxos specialises in blockchain, offering a cryptocurrency brokerage service, asset tokenisation services, and settlement services. A Wells Notice is a letter from the SEC that informs a firm that the SEC has completed an investigation and found violations of the securities laws.

The tweet starts by making the point that why the SEC is interested in BUSD is not clear, but that stablecoins are not securities. Coinbase believes US dollar-backed stablecoins have a role in creating a more equitable and efficient financial system, and that the US needs to encourage the development of stablecoins.