The crypto industry has achieved another milestone against the U.S. SEC with a crucial acknowledgment that stablecoins are not securities.

SEC Closes Investigation into Paxos

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into the New York-based blockchain infrastructure company, Paxos, regarding its Binance-branded stablecoin, Binance USD (BUSD).

In February 2023, Paxos received a Wells Notice, indicating a probe and a potential lawsuit. The SEC accused the firm of offering unregistered securities via BUSD, leading New York authorities to order Paxos to stop minting the stablecoin. After more than a year, the SEC has officially ended the inquiry and closed the case.

“We have concluded the investigation as to Paxos Trust Company, LLC. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Paxos,”

read a letter signed by Jorge Tenreiro, acting chief of the SEC’s Crypto Assets and Cyber unit.

Paxos Prevails

On Tuesday, Paxos received a formal termination notice from the SEC stating that it will not recommend enforcement action against Paxos Trust Company in the investigation of Binance USD (BUSD).

The Paxos probe was part of the broader “Operation Choke Point 2.0”, an extensive SEC crackdown on several cryptocurrency service providers. During this period, the SEC also targeted Binance and Coinbase for alleged securities violations. As a result, Paxos had to wind down the BUSD token and place the stablecoin in a redemption-only status until at least February this year.

Impact on BUSD

The Binance-affiliated stablecoin, which once peaked at a $23 billion market cap, now has a significantly reduced supply of $70 million. Following the dropped investigation, industry participants have questioned whether the SEC should be held accountable for its aggressive stance.

This development clarifies the status of stablecoins as non-securities and potentially strengthens the argument for a comprehensive U.S crypto regulatory framework.

For more updates on the latest developments in cryptocurrency, investing, and finance, stay tuned to Global Crypto News.

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