US SEC claims Binance’s BUSD stablecoin is an unregistered security

Binance stablecoin (BUSD) is now under the radar of the US authorities.

Binance stablecoin BUSD is a popular third-ranked stablecoin in the crypto market. Paxos is a back-end company behind this stablecoin and runs two stablecoins USDP & BUSD. Paxos also has a national trust Bank charter application. Around a week ago a few reports noted that Paxos was facing regulatory pressure to withdraw its application for a national trust bank charter from the OCC but the team denied all such reports.

To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.

— Paxos (@PaxosGlobal) February 8, 2023

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On 12 Feb 2023, Wall Street Journal reported that the United States Securities and Exchange Commission (SEC) sent a Wells notice to the Paxos company to inform that SEC believes BUSD stablecoin is an unregistered security.

Coin Bureau also shared its opinion on this Wells notice and raised questions about how the SEC agency applied the Howey test on BUSD stablecoin on behalf of expectations of profit.

By claiming that $BUSD is a "security" the SEC says that it meets the Howey test – i.e., that there is an expectation of "profit".

How in the hell does a *stablecoin* create that expectation?

— Coin Bureau (@coinbureau) February 13, 2023

Here this is only Wells notice, which means no enforcement action has been taken by the US SEC but this is an indication that the SEC agency may take legal action on behalf of this investigation. So here Paxos also has time to arrange all the answers against this Wells notice. 

UPDATE: @PaxosGlobal receives Wells Notice in connection with stablecoin and connection to @binance $BUSD.

**as per previous sources: “Wells Notice’s are beginning to be sent; stablecoins first, then exchanges.”

— Andrew (@AP_Abacus) February 12, 2023

 Paxos, legal hurdles & PayPal 

Reportedly giant digital bank & payment platform PayPal also decided to hold its stablecoin project with Paxos because of the ongoing regulatory hurdles with the Paxos team. 

PayPal reportedly said that it will work with full compliance, so here the decision has been taken to remain in the safe zone. 

As per reports, Paxos was under investigation of the NYDFS agency.

News that PayPal is pausing work on its stablecoin comes on day after crypto partner Paxos was reported to be under investigation by the NYDFS. $PYPL@SteveAlpher reportshttps://t.co/VoM6QNmODk

— CoinDesk (@CoinDesk) February 10, 2023

Read also: Kraken co-founder become angry at Gensler’ statement over staking services

US SEC claims Binance’s BUSD stablecoin is an unregistered security

 

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