The United States Securities and Exchange Commission (SEC) has expressed intentions of suspending its investigation into Paxos, a stablecoin issuer. The regulatory body has recently written to Paxos stating there will be no enforcement action following initial concerns about the Binance USD (BUSD) token. These inquiries surfaced after Paxos received an SEC notice in February 2023 claiming that BUSD was functioning as an unregistered security, breaching federal laws.
Responding, Paxos clarified it had abided by rules, and that the Wells notice was unwarranted. A statement from Paxos on July 11 suggested the company has consistently argued that its USD-backed stablecoins did not infringe federal securities regulations.
The decision from the SEC is seen as part of a wider trend, following court rulings against the agency. One example is the July 2023 decision in the SEC’s case against Ripple, where a federal judge concluded that the XRP token was not a security. Similarly, in June 2024, a judge dismissed another token-related claim building upon the Ripple ruling in the SEC’s case against Binance.
Despite this, the SEC maintains ongoing enforcement actions against crypto firms such as Ripple, Binance, Kraken and Coinbase. However, reviewing these actions may be a future requirement following a Supreme Court ruling. This ruling would mean courts no longer need to rely on the interpretations of federal agencies when interpreting policies.