Paxos in ‘Constructive Talks’ With SEC Following Enforcement Action on Binance USD (BUSD): Report

New York-based crypto company Paxos Trust Company is in “constructive talks” with the U.S. Securities and Exchange Commission (SEC) following enforcement actions surrounding stablecoin Binance USD (BUSD).

According to a report from Reuters, an internal e-mail from Paxos’ CEO Charles Cascarilla says the SEC is actively in discussions with Paxos after the regulator told the company that it should have registered BUSD as a security.

“We are engaged in constructive discussions with the SEC, and we look forward to continuing that dialogue in private.”

Both SEC and Paxos spokespersons declined to comment on the e-mail.

In a statement released on Monday, February 13, Paxos said it received a “Wells Notice” from the SEC on February 3, with the regulator stating that it is “considering recommending an action alleging that BUSD is a security and that Paxos should have registered the offering of BUSD under the federal securities laws.”

Paxos, however, said it “categorically disagrees” with the idea that BUSD is a security.

“We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary.”

Paxos has faced a flurry of regulatory issues in the past couple of weeks. Also last Monday, news broke that the New York Department of Financial Services (NYDFS) ordered the crypto company to freeze production of BUSD, which aims to maintain a peg to the US dollar.

Paxos subsequently announced that it would “end its relationship with Binance for the branded stablecoin BUSD.” The company also says all BUSD tokens have always and always will be backed by a 1:1 ratio of US dollar-denominated reserves.

According to the new Reuters report,

“Cascarilla said that Paxos was still working with the SEC towards the publication of its application to obtain a clearing agency license, and with the U.S. Office of the Comptroller of the Currency (OCC) to get final approval for its national trust bank charter.”

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• Source: https://dailyhodl.com/2023/02/21/paxos-in-constructive-talks-with-sec-following-enforcement-action-on-binance-usd-busd-report/