Paxos and the Binance USD Stablecoin
- Paxos recently published a letter from its CEO, Charles Cascarilla, in which he discussed the company’s ill-fated BUSD stablecoin.
- The U.S. Securities and Exchange Commission (SEC) has issued a Wells Notice prospectively alleging that BUSD is a security.
- Paxos is engaging with regulators on other matters and is pursuing an application with the SEC through which it intends to offer tokens as securities.
Paxos Asserts Binance USD Is Not A Security
Paxos recently published a letter from its CEO, Charles Cascarilla, in which he discussed the company’s ill-fated BUSD stablecoin. Action from New York regulators led Paxos to stop issuing its Binance USD (BUSD) stablecoin on February 13th. The U.S. Securities and Exchange Commission (SEC) separately issued a Wells Notice prospectively alleging that BUSD is a security.
Cascarilla wrote that Paxos does not believe that under either the Howey or Reves tests, their stablecoins meet the criteria to be considered securities. According to him, these coins are always backed by cash equivalents such as dollars or US Treasury bills but never securities. He also stated that Paxos is involved in “constructive discussions” with the SEC on this matter but will share more information when it can do so publicly. Additionally, if necessary they may “vigorously litigate” their position against any claims made by the SEC.
BUSD Redemptions So Far
Cascarilla reported that Paxos has facilitated more than $2.8 billion in Binance USD redemptions without disruption in the cryptocurrency market since February 14th when Crypto Slate reported $300 million of redemptions completed at that time. He also mentioned that they are engaged with regulators on other matters – they are pursing an application with the Office of the Comptroller of Currency (OCC) through which they aim to obtain a bank charter as well as an application with the SEC through which they intend to offer tokens as securities .
Response From Crypto Community
The crypto community has been largely supportive of Paxos’ stance against claims made by the SEC regarding their stablecoins being classified as securities; many have pointed out how this move could be beneficial for long-term growth of blockchain projects throughout America and beyond if successful .