SEC Ends Probe into Paxos, Providing Clarity on Stablecoin Regulation
The Securities and Exchange Commission (SEC) has quietly ended its probe into New York stablecoin issuer Paxos, signaling a win for the stablecoin sector and providing much-needed clarity on the regulatory status of stablecoins. The decision comes after more than a year of investigation and a Wells notice sent to Paxos over its dollar-backed BUSD stablecoin issued in partnership with Binance.
The SEC’s move to drop the investigation into Paxos comes amidst a broader debate within the crypto industry about whether stablecoins should be treated as securities. The decision offers a sense of relief for Paxos and other stablecoin issuers, as it suggests that, in most cases, stablecoins may not be considered securities.
Walter Hessert, the head of strategy at Paxos, expressed relief at the termination of the investigation, stating that it should create more certainty in the market for large enterprises. The decision may also have broader implications for the stablecoin sector in the U.S., as firms have been looking abroad to launch new offerings due to regulatory uncertainty.
The SEC’s decision to end the probe into Paxos comes on the heels of a partial defeat in a lawsuit against Binance, another major player in the crypto industry. While Congress has yet to pass legislation to regulate the growing asset class, the SEC’s move provides a much-needed win for the stablecoin sector, which includes companies like PayPal and VanEck.
Overall, the decision by the SEC to drop the investigation into Paxos represents a significant development in the ongoing debate over the regulatory status of stablecoins. It offers a sense of clarity and relief for stablecoin issuers and may help to accelerate partnerships and growth within the sector.
