The U.S. Securities and Exchange Commission (SEC) appears to be pulling back on its stablecoin crackdown.
On July 11, Paxos announced it received a “termination notice” from the SEC regarding the regulator’s investigation into BUSD, the Binance-affiliated stablecoin issued by Paxos, on July 9.
The notice said that the SEC will not recommend enforcement action against Paxos, suggesting the SEC determined that BUSD does not comprise a security asset.
Despite being pegged to the U.S. dollar, the SEC had argued that the stablecoin acted as an investment contract, and thus a security.
“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 said. “We believe this development will unlock a new wave of stablecoin adoption by leading global enterprises.”
The move comes nearly 18 months after the SEC issued a Wells Notice to Paxos in February 2023. A Wells Notice is a letter sent by the SEC to notify an entity it has completed an investigation and plans to bring enforcement action against them.
The notice coincided with the New York Department of Financial Services ordering Paxos to cease issuing BUSD. The market cap of BUSD has since tumbled more than 95.5% to just $69.5 million from $15.9 billion, according to CoinGecko.
