Aave Community Considering Freeze BUSD Since Pressure from the SEC to Paxos
The Aave community is currently considering if they should suspend Binance’s BUSD stablecoin on their platform, as the token’s issuer Paxos has been sued by the SEC today.
Aave is a DeFi (Decentralized Finance) protocol which facilitates borrowing, lending and staking through smart contracts between users.
MarcZeller, an Aave community member, proposed that as Paxos will not be issuing any additional BUSD tokens, the amount available will gradually decrease and this could adversely affect peg arbitrage opportunities and asset pegging.
MarcZeller noted that BUSD has no potential for expansion, although there is no danger to the protocol.
So far, the proposal has elicited a favorable reaction from many, with one individual even proposing Aave liquidate its BUSD holdings to help reduce potential risks.
Today, investors shifted funds from Binance’s BUSD stablecoin to other stablecoins like Tether (USDT) and USD Coin (USDC) in an attempt to protect their investments, leading the currency away from its U.S. Dollar peg.