As a crypto investor with a few years of experience under my belt, I’m thrilled to hear that the SEC has dropped its investigation into Paxos and validated Binance USD (BUSD) as a non-security. This decision is a significant victory for stablecoin issuance and regulation in the US, bringing much-needed certainty to the market.
As a financial analyst, I’m excited to share that the Securities and Exchange Commission (SEC) has recently announced the termination of its investigation into Paxos, a prominent stablecoin issuer in the US market. This decision marks a significant win for the stablecoin sector, potentially paving the way for greater regulatory clarity and certainty.
Based on a Fortune article, Paxos received notification from Jorge Tenreiro, acting head of the SEC’s crypto assets division, that the regulatory body intends to take action against Paxos over the Binance USD (BUSD) stablecoin they co-created with Binance. This development comes over a year after the SEC delivered a Wells notice to Paxos, signaling potential enforcement proceedings.
Paxos Emerges From Year-Long Wells Notice Shadow
According to the findings of the study, I, as a researcher, can report that Walter Hessert, Paxos’ head of strategy, expressed a sense of relief upon hearing that the investigation had come to an end. This outcome, he stated, was in line with their predictions and would bring a welcome degree of clarity to the financial market.
Paxos introduced BUSD in collaboration with Binance back in September 2019. Although BUSD didn’t surpass Tether’s USDT and Circle’s USDC in market control, it became widely adopted as a stablecoin due to its significant role within the Binance platform.
Despite keeping a stable value linked to the US dollar, Binance’s BUSD was later challenged by the SEC in a lawsuit, asserting that it falls under the category of investment contracts and consequently, is considered a security based on the Howey test. This contention, widely debated within the crypto community, raises questions about the relevance of this decades-old regulatory framework for the dynamic crypto market.
BUSD Validated As Non-Security
In response to the SEC’s description, Paxos countered by insisting that BUSD is fully collateralized with an equal value of dollar-held reserves, without engaging in the SEC’s arguments concerning revenue sharing.
The investigation carried on for more than a year, as the SEC verified in their reply to Fortune’s Freedom of Information Act query, indicating that it was still underway as of July 3rd.
Following a federal judge’s decision on June 28 in favor of Binance, the SEC’s position seems to have changed regarding the sale of BUSD. The ruling concluded that this sale did not equate to a securities offering, resulting in the dismissal of the associated charges.
As I compile this information, the price of Binance’s native token, BNB, hovers around $532 – a 1% increase within the past 24 hours.
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2024-07-11 18:11