The U.S. Securities and Exchange Commission (SEC) deemed BUSD an unregistered security in February 2023 and issued a Wells Notice to the issuer Paxos, believing that its issuance of BUSD violated investor protection laws and would investigate it.
However, according to Fortune Magazine, the U.S. Securities and Exchange Commission (SEC) recently decided to end its investigation into Paxos and determined that BUSD is not a security. This decision provides regulatory clarity for stablecoins. Jorge Tenreiro, acting director of the SEC’s cryptoassets and cyber division, reportedly said in a letter to Fortune this week that he does not plan to recommend further enforcement action by the commission.
The report pointed out that the SEC made this decision likely because the federal judge’s ruling in favor of Binance on June 28 shook the position of continuing the investigation of the case, because the ruling determined that the sale of BUSD did not constitute a securities issuance and ordered the SECS Drop related charges against Binance.
Walter Hessert, head of strategy at Paxos, said in an interview:
"The formal closure of this investigation is a huge relief to us. It was what we had expected all along and it really should create more certainty for the market and we are seeing more and more large players getting on board. "
It is worth mentioning that this is not the only cryptocurrency investigation that the SEC has dropped recently. According to previous reports by Zombit, the SEC Enforcement Department told blockchain software developer ConsenSys that the agency will end its investigation into Ethereum 2.0, which means that the SEC will not file charges that the sale of ETH is a securities transaction.
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