Another Big Crypto Win: SEC Drops Investigation Into Paxos, Wont Sue Over BUSD Stablecoin
The U.S. Securities and Exchange Commission (SEC) has finally concluded its investigation into stablecoin issuer Paxos, with no enforcement action on the horizon.
SEC Closes The Book On Its Paxos Probe
Paxos announced on Thursday that the SEC notified the crypto infrastructure provider that it was closing its investigation and would not recommend an enforcement action against it.
On Tuesday, we received a formal termination notice from the SEC stating that it will not recommend enforcement action against Paxos Trust Company, wrote Paxos on X (formerly Twitter), adding that the regulators probe had centered on the Binance USD (BUSD) token.
The SEC sent a Wells Notice a precursor to regulatory action to Paxos last year over its involvement in BUSD. In response to the legal threat, Paxos asserted that BUSD did not fall under federal securities laws and indicated that it was ready to fight any charges initiated by the SEC.
Paxos ultimately ceased minting BUSD under the guidance of the New York Department of Financial Services. The SEC had alleged that the BUSD stablecoin was an unregistered security in a lawsuit lodged against Binance last year.
BUSDs Status As A Non-Security Validated
Now, the SECs decision to conclude its probe into BUSD prompts questions about whether the top Wall Street watchdog views stablecoins as non-securities.
Paxos Trust Company has always maintained that its USD-backed stablecoins are not securities under federal securities laws, Paxos said in a press release. We believe this development will unlock a new wave of stablecoin adoption by leading global enterprises.
The withdrawal follows late last months court ruling siding with Binance, which cited Ripples historic July 2023 ruling in dismissing the Securities and Exchange Commissions allegations that Binances native token, BNB, and the BUSD stablecoin qualify as securities when sold on secondary markets.
Stablecoin USDC issuer Circle CEO Jeremy Allaire also celebrated the move by the SEC, saying Regulatory clarity that payment stablecoins are payment money and not securities is prevailing all around the world.
The SEC also recently ended an investigation into Ethereum 2.0., inferring that it doesnt deem Ether, the industrys second-largest cryptocurrency by market capitalization, a security.
Text source: ZyCrypto
