Paxos, the blockchain technology company that issued and managed BUSD on behalf of Binance, announced its readiness to challenge the U.S. Securities and Exchange Commission (SEC) over its claims that BUSD is security. Paxos has denied the SEC’s allegations and calling them baseless, media reports said.
Recently, Paxos has been asked by New York Department of Financial Services (NYDFS) to stop minting BUSD, bringing the third largest stablecoin with $16 million in outstanding to a grinding halt.
The SEC recently sent a letter to Paxos, raising concerns that BUSD might be considered a security under the U.S. law, triggering legal and regulatory requirements. The regulatory agency asked Paxos to provide additional information about the stablecoin’s legal status, its marketing and sale, and its operation.
In response, Paxos stated that BUSD is not a security and that it is a fully regulated stablecoin, backed 1:1 by the U.S. dollar and subject to regular audits by independent third-party firms. Paxos CEO Charles Cascarilla also emphasized that BUSD has been available in the market for more than two years and that it has gained wide adoption among users, including in DeFi applications.
“Paxos has always operated with transparency and in compliance with all relevant laws and regulations. We stand by the robustness of our BUSD token and our track record of operating within the law,” said Cascarilla.
Paxos’ decision to challenge the SEC’s claims could have broader implications for the stablecoin industry, which has been growing rapidly in recent years.
