The United States Securities and Exchange Commission (SEC) will consider BUSD as an unregistered security starting from February 2023, and has issued a Wells Notice to the issuer Paxos, deeming its issuance of BUSD to be in violation of investor protection laws and will initiate an investigation.
However, according to a report by 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 Acting Director of the SEC’s Division of Corporation Finance and the Division’s Crypto Assets and Network Issues Officer, stated in a letter to Fortune magazine this week that he does not intend to recommend further enforcement action by the Commission.
The report points out that the SEC’s decision is likely due to a federal judge’s ruling on June 28 that supported Binance and shook the position of continuing the investigation. 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, Chief Strategy Officer at Paxos, stated in an interview:
“It is worth noting that this is not the only recent investigation action against cryptocurrencies that the SEC has dropped. According to previous reports by Zombit, the SEC’s enforcement division has informed blockchain software developer ConsenSys that it will end its investigation into Ethereum 2.0, indicating that the SEC will not bring charges that the sale of ETH constitutes securities transactions.”
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