The U.S. Securities and Exchange Commission (SEC) has deemed BUSD as an unregistered security and has issued a Wells Notice to the issuer, Paxos, stating that its issuance of BUSD violates investor protection laws and that an investigation will be conducted.
However, according to a report from 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 the report, Jorge Tenreiro, the Director of the SEC’s Division of Enforcement for Cryptocurrencies and Cybersecurity, stated in a letter to Fortune magazine this week that he does not intend to recommend further enforcement action by the Commission.
The report suggests that the SEC’s decision is likely influenced by a federal judge’s ruling on June 28 that supported Binance, which shook the position to continue investigating this case. The ruling stated that the sale of BUSD does not constitute a securities offering and ordered the SEC to withdraw its related charges against Binance.
Walter Hessert, Head of Strategy at Paxos, stated in an interview:
“It is worth noting that this is not the only recent investigation action 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, meaning that the SEC will not bring charges against the sale of ETH as a securities transaction.”