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In a surprising turn of events, the United States Securities and Exchange Commission (SEC) has formally ended its investigation into Paxos Trust Company, the issuer of the Binance USD (BUSD) stablecoin.
The decision, announced Thursday by Paxos, marks a significant victory for the stablecoin industry and raises questions about the SEC's broader approach to digital assets.
The SEC's probe into Paxos, initiated with a Wells notice in February 2023, had cast a shadow over the stablecoin sector, fueling uncertainty and hindering innovation. The agency had been examining whether BUSD should be classified as a security, a designation that would have subjected it to a stringent regulatory framework.
However, in a letter dated July 9, the SEC's acting chief of the crypto assets and cyber unit, Jorge Tenreiro, informed Paxos that he would not recommend enforcement action. This abrupt about-face comes just days after the SEC suffered a setback in its lawsuit against Binance, the world's largest cryptocurrency exchange.
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Paxos has consistently maintained that its stablecoins are not securities and said that the Wells Notice it has received was "unwarranted and unjustified." The company welcomed the SEC's decision, emphasizing its commitment to consumer protection and regulatory compliance.
In an interview with Fortune, Walter Hessert, Paxos' head of strategy, described the termination as "an enormous relief" and expressed hope that it would create more certainty for the growing number of enterprises entering the stablecoin market.
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