The US Securities and Exchange Commission (SEC) has decided to end its investigation into Paxos regarding the alleged securities violation related to the issuance of the BUSD (Binance USD) token. Paxos, a stablecoin issuer, had received a Wells Notice in February 2023, indicating the SEC’s intent to look into the company’s role in providing unregistered securities to US investors.
Paxos made an announcement on X platform, stating, “Paxos successfully concludes SEC investigation of BUSD stablecoin.” The company also mentioned that it had received an official termination letter from the SEC, stating that no enforcement action would be recommended against Paxos Trust Company in connection with the investigation of Binance USD (BUSD).
In response to the news, Paxos expressed its belief in the significance of stablecoins in the financial system. The company highlighted its commitment to offering consumer-safe asset-referenced products and stated that the resolution of this investigation could lead to increased adoption of stablecoins by major global enterprises. Paxos emphasized that well-designed stablecoins with robust consumer protections, like the ones it issues, have the potential to revolutionize the financial system, particularly in payment, settlement, and remittance scenarios, making the system more stable, accessible, and transparent.
The SEC’s decision to drop the investigation comes amidst a series of court rulings that have challenged the SEC’s classification of certain cryptocurrencies as securities. For instance, in a separate case involving Binance, a judge determined that BUSD did not meet the criteria to be considered a security. This ruling echoed an earlier decision in 2023, where a judge ruled that XRP, the native token of Ripple, was not a security.
These recent developments could signify a shift in the SEC’s approach towards regulating the crypto industry, as more companies voice concerns about the regulator’s actions hindering innovation and adoption of the technology. Companies like Binance, Coinbase, Kraken, and Consensys are actively contesting cases brought against them by the SEC, asserting their compliance with regulations. As the SEC reconsiders its investigations, these firms and their supporters remain steadfast in their stance that they have not engaged in any unlawful activities.