Paxos Trust Company, the firm behind Binance’s stablecoin, is in discussions with the U.S. Securities and Exchange Commission (SEC) after the regulator informed the company that the token should have been registered as a security. The news came to light through an email from Paxos’ CEO, Charles Cascarilla, sent to Paxos employees. In the email, Cascarilla stated that Paxos is having constructive discussions with the SEC and would defend its position that Binance USD is not a security through litigation if required.
Paxos to End Relationship with Binance
According to Cascarilla, Paxos’ decision to end its relationship with Binance is unrelated to the NYDFS directive or the communication Paxos had with the SEC over Binance USD. He stated that the Binance relationship no longer aligns with Paxos’ current strategic priorities. Binance, however, said it would continue to support Binance USD for the foreseeable future.
The New York Department of Financial Services (NYDFS) recently ordered Paxos to stop minting Binance USD, the third-biggest stablecoin, with about $16 billion in circulation. In response, Paxos said it would stop issuing new Binance USD from Feb. 21, but it would continue to support and redeem the tokens until at least February 2024.
Paxos Working with Regulators
Cascarilla stated that Paxos was still working with the SEC towards the publication of its application to obtain a clearing agency license and with the U.S. Office of the Comptroller of the Currency (OCC) to get final approval for its national trust bank charter. The OCC declined to comment.
Stablecoins, which are digital tokens typically backed by traditional assets designed to hold a steady value, have emerged as one of the key cogs in the crypto economy. They are used for trading between volatile tokens like bitcoin and, in some emerging economies, as a means to protect savings against inflation.
This story originally appeared on reuters
