SEC quietly closes investigation into Paxos - no securities charges against BUSD
The latest decision potentially shapes future crypto regulations.
Key Takeaways
- The SEC has concluded its investigation into Paxos, recommending no enforcement action.
- This decision follows a court ruling that dismissed a key securities charge against Binance.
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The US Securities and Exchange Commission (SEC) quietly concluded its investigation into Paxos, the issuer of the stablecoin Binance USD (BUSD), without recommending any enforcement action, Jorge Tenreiro, Deputy Chief of the SEC’s Crypto Asset and Cyber Unit, told Fortune.
The decision marks a significant turn in the ongoing debate over whether stablecoins should be classified as securities.
In February 2023, Paxos announced it received a Wells notice from the SEC concerning the BUSD stablecoin issued by Paxos in collaboration with Binance. The regulator’s actions suggested it intended to sue the company, alleging that BUSD is an unregistered security. In response to the legal threat, Paxos asserted that BUSD does not fall under federal securities laws.
The withdrawal follows last month’s court ruling favoring Binance, which dismissed SEC’s claims that BNB, Binance’s native token, and BUSD are securities on secondary markets.
“The termination of this investigation formally is an enormous relief for us,” Walter Hessert, head of strategy at Paxos, told Fortune, adding that this resolution might foster greater market certainty among large enterprises exploring the stablecoin space.
Despite the SEC’s non-committal stance on public comments, the closure of this case could influence future regulatory approaches to similar crypto assets in the US.
This is a developing story. We’ll give updates on the situation as we learn more.
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