• The SEC has decided not to pursue enforcement action against Paxos in the investigation of Binance USD (BUSD).
  • Paxos emphasized that its USD-backed stablecoins are not securities and believe this decision will boost stablecoin adoption and transform the financial system.

The U.S. Securities and Exchange Commission (SEC) has been in an intense battle with the crypto industry for quite some time. 

However, it seems that the SEC has found itself on the losing side. In fact, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam even said that 70% to 80% of all cryptocurrencies are not securities.

On June 11, Paxos announced that it received a formal termination notice from the SEC on July 9, 2024, stating that it will not recommend enforcement action against Paxos Trust Company in the investigation of Binance USD (BUSD). 

“The termination of this investigation formally is an enormous relief for us,” said Walter Hessert, the head of strategy at Paxos, in an interview with Fortune. “It’s what we expected all along, and it really should create, hopefully, more certainty in the market among what we see as a growing number of large enterprises.”

Paxos in its official announcement emphasized that it has always maintained that its USD-backed stablecoins are not securities under federal securities laws and that the Wells Notice was unwarranted and unjustified. 

“We are proud of our relentless advocacy for stable-value digital assets and that the SEC staff determined it will not bring an enforcement action against Paxos in connection with BUSD,” said Paxos

The company further stated that it believes this development will unlock a new wave of stablecoin adoption by leading global enterprises. Well-designed stablecoins with strong consumer protections will transform the financial system in payments, settlement, and remittance use cases. 

Edited by Harshajit Sarmah