The U.S. Securities and Exchange Commission (SEC) will consider BUSD as an unregistered security starting from February 2023 and has issued a Wells notice to the issuer Paxos, stating that its issuance of BUSD violates investor protection laws and will be investigated.
However, according to Fortune magazine, the SEC recently decided to end its investigation into Paxos and determined that BUSD is not a security. This decision provides clarity for stablecoins in terms of regulation. According to reports, Jorge Tenreiro, the Acting Chief of the SEC’s Division of Crypto Assets and Network Investments, stated in a letter to Fortune magazine this week that he does not intend to recommend further enforcement actions by the Commission.
The report suggests that the SEC’s decision was likely influenced by a federal judge’s ruling on June 28, which supported Binance and shook the position of continuing the investigation. The ruling stated that the sale of BUSD does not constitute a securities issuance and ordered the SEC to withdraw its related charges against Binance.
In an interview, Walter Hessert, the Head of Strategy at Paxos, stated:
“It is worth noting that this is not the only recent investigation that the SEC has dropped regarding cryptocurrencies. According to a previous report by Zombit, the SEC’s enforcement division informed blockchain software developer ConsenSys that it will end its investigation into Ethereum 2.0, indicating that the SEC will not bring charges claiming that the sale of ETH constitutes a securities transaction.”
