SEC Concludes Investigation into Paxos, Declares BUSD Not a Security

• SEC ends Paxos probe, declares BUSD not a security, providing regulatory clarity for the crypto market.
• Paxos and Binance relieved as BUSD confirmed not a security, influencing future stablecoin regulations.
• Growing interest in stablecoins as SEC’s decision on Paxos boosts confidence in the digital asset market.

The U.S. Securities and Exchange Commission (SEC) has officially ended its investigation into Paxos, a stablecoin issuer. On July 9th, the SEC’s chief of crypto assets and cyber unit, Jorge Tenreiro, informed Paxos that no enforcement action would be recommended. This decision marks the conclusion of a year-long probe into Paxos’ partnered stablecoin with Binance, known as BUSD.

Background of the Investigation

A year ago, Paxos received a Wells Notice from the SEC, indicating potential enforcement action regarding its issuance of BUSD. This investigation raised questions about whether BUSD, a stablecoin backed by Binance, could be classified as a security. However, the SEC’s decision to end the probe clarifies that BUSD is not a security, providing relief and certainty to Paxos and the broader crypto market.

Impact on the Crypto Market

The conclusion of the investigation is seen as a significant win for Paxos and Binance, as well as for the broader crypto market. The SEC’s move comes after the Commodity Futures Trading Commission (CFTC) Chairman stated that 70% to 80% of all cryptocurrencies are not securities. This development is part of a larger trend where regulatory bodies are reevaluating their stance on digital assets.

Walter Hessert, head of strategy at Paxos, expressed relief over the SEC’s decision. “The termination of this investigation is an enormous relief for us. It’s what we expected all along, and it should create more certainty in the market,” he told Fortune.

Growing Interest in Stablecoins

The stablecoin market has seen growth recently, with traditional finance firms like PayPal and VanEck entering the space. The conclusion of the SEC’s investigation into Paxos could pave the way for more regulatory clarity for U.S.-based industry participants. This clarity is essential as more enterprises explore stablecoins and other digital assets.

Paxos and Binance began issuing the BUSD token in 2019. Since then, it has become one of the market’s leading stablecoin offerings. The SEC’s investigation lasted over a year, with a recent federal judge ruling in favor of Binance on June 28th potentially influencing the SEC’s decision. The judge ruled that BUSD sales did not constitute a securities offering, further solidifying the stance that BUSD is not a security.