Regulation
SEC Quietly Closes Paxos Investigation; No Securities Charges Against BUSD
Key points
- The SEC has concluded its investigation into Paxos, recommending no enforcement action.
- This decision follows a court ruling that dismissed a major securities charge against Binance.
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The U.S. Securities and Exchange Commission (SEC) has quietly concluded its investigation into Paxos, the issuer of the Binance USD (BUSD) stablecoin, without recommending any enforcement action, said Jorge Tenreiro, deputy head of the SEC’s Crypto Asset and Cyber unit. said Fortune.
The decision marks a significant turning point in the ongoing debate over whether stablecoins should be classified as securities.
In February 2023, Paxos announced received a Wells Notice from the SEC regarding the BUSD stablecoin issued by Paxos in partnership with Binance. The regulator’s actions suggested it intended to sue the company, claiming that BUSD is an unregistered security. In response to the legal threat, Paxos said BUSD does not fall under federal securities laws.
The withdrawal follows last month’s court ruling in favor of Binance, which rejected the SEC’s claims that BNB, Binance’s native token, and BUSD are securities on secondary markets.
“The formal conclusion of this investigation is a huge relief for us,” Walter Hessert, Paxos’ chief strategy officer, told Fortune, adding that the resolution could foster greater market certainty among large companies exploring the stablecoin space.
Despite the SEC’s nonbinding stance on public comment, the closure of this case could impact future regulatory approaches toward similar cryptocurrencies in the United States.
This is a developing story. We will update you on the situation as we learn more.
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