The SEC quietly ended the Paxos investigation and did not determine that BUSD is a security! But issuance has collapsed by 99%

This site (120Btc.coM): Is the stable currency BUSD dead in vain? In February last year, the market value of BUSD suffered a cliff-like decline due to regulatory restrictions (issuance volume has evaporated 99% from the high point). At that time, Paxos was sued by the SEC for "issuing unregistered securities" and was ordered by the New York State Department of Financial Services to stop issuing new BUSD.

Not long after, both Paxos and Binance announced the termination of their partnership for BUSD. On December 15 last year, Binance also officially stopped supporting BUSD.

SEC quietly ended Paxos investigation

However, after more than a year, the U.S. Securities and Exchange Commission (SEC) recently quietly ended its investigation into Paxos, a New York-based stablecoin issuer. Are stablecoins considered securities? The current situation seems to be negative.

According to information obtained by Fortune, on July 9, Jorge Tenreiro, acting head of the SEC’s Crypto Assets and Network Division, informed Paxos that he did not intend to recommend enforcement action. This letter means the end of more than a year of investigation. Walter Hessert, head of strategy at Paxos, said in an interview with Fortune: "We are relieved that this investigation has been officially terminated. This is the result Paxos has always expected, and we believe it will create more certainty for the market."

Stablecoins still in a gray area

Looking back at the lawsuit against Binance, the U.S. Securities and Exchange Commission (SEC) argued that stablecoins are an investment contract and therefore a security. The SEC believes that the reserves behind stablecoins allow Binance and Paxos to earn large profits, and part of these profits are provided to Binance users in the form of income.

In Paxos’ statement at the time, Paxos stated that it disagreed with the SEC’s position, emphasizing that BUSD is backed 1:1 by U.S. dollar-denominated reserves and there is no issue of profits involved.

SEC’s decision to end Paxos has triggered thinking in the crypto industry, because stablecoins are still in a gray area of ​​regulation. Unless new legislation emerges, this situation will be difficult to change. Many believe that stablecoins differentiate themselves from many other crypto assets due to their lack of profit expectations (one of the important tests in determining whether they are securities).

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