Paxos, the blockchain infrastructure platform behind the Binance USD (BUSD) stablecoin, announced on Thursday that regulators have dropped an investigation into the firm regarding its dollar-pegged tokens. This result represents a major legal victory for the crypto world, where a thick fog reigns over the legal classification and regulatory treatment of stablecoins. 🎉
After Paxos began its investigation of BUSD in February 2023, the Securities and Exchange Commission (SEC) sent Paxos a formal termination notice on July 9, indicating that it would not take further enforcement action. “Paxos Trust Company has always maintained that its USD-backed stablecoins are not securities under the federal securities laws and that the Wells Notice is unfair and unfair,” Paxos said in a press release on Thursday. 📜
BUSD was the third-largest stablecoin alongside Tether (USDT) and Circle USD (USDC) and was rapidly gaining market share thanks to Binance's efforts to build liquidity around it. However, Binance was forced to abandon the asset, and since 2023, Tether's stablecoin dominance has exploded to 69.19% of the entire market.
The outcome of the SEC's investigation into Paxos and BUSD has great significance for the crypto industry. USDT and USDC operate in a very similar way to how BUSD operates, which means a court ruling that BUSD is an unregistered security could leave Tether and Circle facing a similar fate.
Binance is being charged by the SEC for allegedly issuing and trading multiple unregistered securities on its platform – one of which was allegedly BUSD.