The U.S. Securities and Exchange Commission (SEC) has officially concluded its investigation into stablecoin issuer Paxos, signaling a significant win for the crypto market. On July 9, Jorge Tenreiro, the SEC’s chief of crypto assets and cyber unit, informed Paxos that he was not recommending enforcement action against the firm.
Background and Resolution
A year ago, Paxos received a Wells Notice from the SEC, indicating potential enforcement action over its partnered stablecoin with Binance, known as Binance USD (BUSD). The end of this investigation clarifies that BUSD is not considered a security, providing much-needed clarity for the asset.
Implications for Paxos and the Crypto Market
The conclusion of this investigation marks a pivotal moment for Paxos and the broader crypto market. Walter Hessert, Paxos’ head of strategy, expressed relief, stating, “The termination of this investigation formally is an enormous relief for us. 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.”
Impact on Regulatory Landscape
The SEC’s decision comes amid ongoing debates about the regulatory status of cryptocurrencies. Recently, the Chairman of the Commodity Futures Trading Commission (CFTC) stated that 70% to 80% of all cryptocurrencies are not securities, which may have influenced the SEC’s stance. This development is expected to foster more regulatory clarity for U.S.-based industry participants.
Also Read: Paxos in Talks with SEC Over Binance USD Registration
Growth of the Stablecoin Market
The stablecoin market has seen significant growth, attracting notable traditional finance firms like PayPal and VanEck. The positive outcome of the Paxos investigation is anticipated to encourage further participation and innovation within the sector.
Paxos and Binance began issuing the BUSD token in 2019, which quickly became a prominent offering in the market. The SEC’s investigation lasted over a year, with a recent federal judge ruling on June 28 in favor of Binance, likely influencing the SEC’s decision. The ruling determined that BUSD sales did not constitute a securities offering.
