The U.S. Securities and Exchange Commission’s attack on crypto has continued for a second week. Just as Asia got to work on Monday, the Wall Street Journal had a bombshell: the SEC was going after Binance-branded stablecoin BUSD.

Going after BUSD might seem like a strange tactic to some observers. While the stablecoin wears Binance’s branding, it's issued by Paxos and regulated by the New York Department of Financial Services. As opposed to Tether, which fought in court to keep what’s backing USDT a secret, BUSD is the right way to do a stablecoin.

Even as Binance CEO Changpeng "CZ" Zhao tweeted that BUSD "funds are Safu," the market reacted negatively to the report. Starting Asian morning hours on Monday, the BNB Chain's native BNB tokens fell 7% and BUSD saw some $52 million in inflows to exchanges - a sign of bearish sentiment, data firms like CryptoQuant said.

Sources close to the matter say the whole thing came without warning. But that’s not good enough for the SEC.

The regulator has placed a curse on it – the Howey Test – a 1933 U.S. Supreme Court case that determined that If a transaction is found to be an investment contract, it’s considered a security.

To be sure, there is an argument – an ancient one in crypto years – that stablecoins are securities.

A June 2022 briefing paper prepared by the Congressional Research Service outlines how under the Reves test, which came from a 1990 case that examined when a note is a security, stablecoins may qualify as securities under Reves’ four-part test.

“Even so, some commentators have proposed theories to support the proposition that stablecoin purchasers may be motivated by profits for purposes of the Howey and Reves tests,” the CRS paper reads. “In brief, the arguments appeal to the role that stablecoins play in facilitating cryptocurrency speculation and the fact that some stablecoins have traded above par during crypto-market turmoil.”

CRS concludes that the issue remains “unsettled,” but cautions that the lack of clarity sets the stage for a trial.

And here we are today.

The problem is, while the U.S. engages in “regulation by enforcement,” Asia’s financial centers are developing clear-cut frameworks.

Hong Kong is developing its own stablecoin regime, which looks to give the green-light to asset-backed stablecoins (provided the reserve assets are of “high quality and high liquidity” while meeting outstanding stablecoins in circulation) but gives a red light to algorithmic stablecoins.

Meanwhile, the Monetary Authority of Singapore is in the process of consultation with stablecoin issuers. One proposed route could see them being licensed under the city-state’s digital payment token service providers regime, which is regulated by the Payment Services Act 2019.

In an interview with CoinDesk during the Singapore Fintech Week, Ripple’s general counsel, Stu Alderoty, who’s currently leading Ripple’s fight against the SEC, said that all of this simply hurts the retail consumer in the U.S. that the SEC is supposed to protect.

“It has not provided clarity, and it's pushing innovation offshore to other economic centers like Singapore,” he said. “If the U.S. gets this wrong, they're going to lose their position as a leader in this new financial economy.”

Binance, in a statement to CoinDesk after the story broke, seemed to amplify Alderoty’s thoughts.

“Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from further undue harm," a spokesperson said.