Blockchain and tokenization infrastructure platform Paxos has been notified by the U.S. Securities and Exchange Commission (SEC) that it will not be recommending an enforcement action against Paxos Trust Company. The SEC had drawn Paxos into its investigation of Binance.
According to a Paxos press statement, the company received the SEC notice on July 9, 2024. It said it has long asserted that its USD-backed stablecoins do not qualify as securities under federal securities laws. It argues the Wells Notice it received was not justified.
"We are proud of our relentless advocacy for stable-value digital assets and that the SEC staff determined it will not bring enforcement action against Paxos in connection with BUSD," the company stated in the release. "We believe this development will unlock a new wave of stablecoin adoption by leading global enterprises."
According to reports by Reuters and other media outlets, the SEC told Paxos in February that it should register Binance’s stablecoin as a security. In the same month, the New York Department of Financial Services issued a consumer alert stating it had ordered Paxos to cease minting Binance USD. Paxos decided to stop issuing the stablecoin beginning on February 21, though it said it would continue to support and redeem the tokens until February 2024.
According to the statement, Paxos maintains that stablecoins will contribute to a more accessible, stable, and transparent financial system. The company envisions properly designed stablecoins having a transformative effect on payments, settlement, and remittance use cases.
The company continued in its statement, "Paxos has and always will prioritize the safety of customer assets. Paxos-issued stablecoins are always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts. Paxos stands apart as the only issuer to secure regulatory oversight in order to introduce safe solutions that will drive significant innovation across the global financial system."
