SEC ends probe into Paxos, no actions on BUSD stablecoin
The US Securities and Exchange Commission (SEC) has ended its investigation into stablecoin issuer Paxos.
On July 11, Paxos announced that it received an investigations termination notice from the SEC a few days earlier on July 9. The notice confirmed that the regulator would not pursue enforcement action against Paxos Trust Company regarding the Binance USD (BUSD) stablecoin.
This development comes over a year after the SEC issued a Wells notice suggesting a potential enforcement action against the stablecoin issuer over its role in the dollar-backed BUSD stablecoin. Notably, it also follows a recent federal judges ruling that BUSD sales did not contravene securities law, as the financial regulator claimed.
While BUSDs supply has all but evaporated, Paxos had publicly maintained that the stablecoin was not a security and promised to fight the SEC claims.
Following the completion of the SECs investigations, the firm reiterated this claim, stating:
Paxos Trust Company has always maintained that its USD-backed stablecoins are not securities under federal securities laws and that the Wells Notice was unwarranted and unjustified.
Paxos has issued several regulated digital assets, including PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG). The company holds licenses from various financial regulators, including the NYDFS in the US, the MAS in Singapore, and the FSRA in the Abu Dhabi Global Market.
New wave of adoption
Paxos predicts that the conclusion of the SECs investigation into the BUSD stablecoin will spur a new wave of stablecoin adoption by major global enterprises.
It stated:
Well-designed stablecoins with strong consumer protections like those issued by Paxos will transform the financial system in payments, settlement and remittance use cases. This transformative technology will make the financial system more stable, accessible and transparent.
Stablecoins have proven to be one of the most effective real-world applications of crypto technology, particularly in emerging markets such as Nigeria. The assets are usually pegged to the US dollar and provide a stable alternative to volatile crypto like Bitcoin.
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