SEC Drops Investigation into Paxos, Boosting Stablecoin Sector
In what could be a major victory for stablecoin issuance and regulation in the US, the Securities and Exchange Commission (SEC) has decided to drop its investigation into Paxos, providing a major boost to the stablecoin sector.
Paxos Emerges From Year-Long Wells Notice Shadow
According to a Fortune report on the matter, the decision was communicated to Paxos by Jorge Tenreiro, acting chief of the SEC’s crypto assets unit, and comes more than a year after the regulator sent a Wells notice to the New York-based institution, indicating a possible enforcement action over the Binance USD, or commonly known as BUSD, stablecoin, which Paxos developed in partnership with Binance.
– Walter Hessert, Paxos’ head of strategy, expressed relief at the termination of the investigation, stating that it aligns with their expectations and brings much-needed certainty to the market.
– Paxos initially launched BUSD in partnership with Binance in September 2019. While BUSD did not overtake its competitors Tether’s USDT and Circle’s USDC stablecoins in terms of market dominance, it gained its status as a widely used stablecoin largely due to its integral role within the Binance ecosystem.
BUSD Validated As Non-Security
– Paxos disagreed with the SEC’s characterization, asserting that BUSD was fully backed by dollar-denominated reserves in a 1:1 ratio, without delving into the agency’s claims regarding profit distribution.
– The investigation persisted for over a year, as confirmed by the SEC in response to a Freedom of Information Act request from Fortune, with the agency stating its active and ongoing status as of July 3.
– However, it appears that the SEC’s stance shifted following a federal judge’s ruling on June 28, which favored Binance and concluded that the sale of BUSD did not constitute a securities offering, leading to the dismissal of the charges.
Market Response
– At the time of writing, Binance’s native token BNB trades at $532, up by 1% in the 24-hour time frame.
Hot Take: SEC’s Decision Signals Positive Momentum for Stablecoins
In a significant turn of events, the Securities and Exchange Commission’s decision to drop its investigation into Paxos marks a pivotal moment for the stablecoin sector in the United States. This move provides a much-needed boost to stablecoin issuance and regulation, offering a sense of clarity and confidence to industry participants.
By
By
By
By