The SEC drops its investigation into Paxos, deciding not to pursue enforcement action over the Binance USD stablecoin.
In a significant development for the cryptocurrency sector, the United States Securities and Exchange Commission (SEC) has decided to cease its investigation into Paxos, a stablecoin issuer, and will not pursue an enforcement action. This decision comes after Paxos received an SEC Wells notice in February 2023 regarding its Binance USD (BUSD) token, which the SEC had considered unregistered security.
Key Points:
SEC's Decision:
On July 9, the SEC communicated through a letter by Jorge Tenreiro, acting chief of the crypto assets and cyber unit, that it would not recommend enforcement action against Paxos concerning BUSD.
Background of the Investigation:
Paxos was issued a Wells notice by the SEC in February 2023, which indicated potential legal action due to BUSD being labeled an unregistered security by the SEC.
Paxos' Response:
Paxos maintained that its stablecoins, including BUSD, are not securities under federal laws. In a statement on July 11, Paxos expressed satisfaction with the SEC’s decision, asserting that the Wells Notice was unjustified.
Impact of Court Rulings:
Recent court decisions have influenced the SEC's stance. Notably, in July 2023, a federal judge ruled in SEC v. Ripple that XRP was not a security for programmatic sales on digital exchanges. This ruling impacted similar cases, including the SEC’s approach to BUSD.
Ongoing SEC Actions:
Despite dropping the case against Paxos, the SEC continues its enforcement actions against other crypto firms like Ripple, Binance, Kraken, and Coinbase. These actions are under scrutiny, especially after a Supreme Court ruling altered how courts defer to federal agencies in policy interpretation.
The SEC’s decision to halt its enforcement action against Paxos marks a pivotal moment in the regulatory landscape of cryptocurrencies. This outcome not only validates Paxos' stance on stablecoins but also highlights the evolving judicial perspective on digital assets. As the SEC navigates ongoing cases, the crypto industry remains vigilant, anticipating further regulatory clarifications and adjustments.
Source: Cointelegraph
Comments