Breaking: SEC Drops Probe Into Paxos, Affirming Stablecoins’ Non-Security Status

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Joel Frank

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Joel Frank

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Since graduating with a degree in economics from the University of Birmingham in 2018, Joel has worked as a financial market/cryptocurrency analyst. He firmly believes that emerging crypto technology...

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July 11, 2024 10:45 EDT

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The SEC just dropped its probe into crypto firm Paxos over its BUSD stablecoin one year after issuing a Wells Notice to the firm, per a Fortune report.

Scoop: The SEC dropped its investigation into Paxos over its stablecoin BUSD, a major win for the crypto industry.

The decision comes more than a year after the agency sent a Wells notice to Paxos signaling an impending enforcement action:https://t.co/FtqfnNEXRq

— Leo Schwartz (@leomschwartz) July 11, 2024

The news is being hailed as a major win for the crypto market.

That’s because, ever since the SEC’s Wells Notice to Paxos one year ago, there has been uncertainty over whether stablecoins would be viewed as securities in the US.

And the SEC’s decision to drop its Paxos investigation suggests that no, stablecoins are unlikely to be viewed as securities in the US.

SEC Drops Probe Into Paxos – End of Anti-Crypto Era?

The SEC’s decision to drop its probe into Paxos’ BUSD stablecoin is another sign that the anti-crypto stance of US policymakers is easing.

The SEC embarked on an aggressive regulation by enforcement campaign against the crypto sector in 2023.

The underlying claim – most cryptos are securities and should be regulated as such.

Critics of the SEC claimed this approach was aimed to sow fear and chaos in the crypto sector, potentially even killing it.

But 2024 has seen this policy stance start to reverse. The SEC had been campaigning to classify Ethereum as a security.

But a few months ago, it did an abrupt policy reversal and ended up approving Ethereum ETFs.

These ETFs are expected to launch before the end of the month.

The shifting SEC stance could be related to politics. Republican Presidential candidate Trump has come out as ardently pro-crypto in recent months.

DONALD TRUMP TO SPEAK AT BITCOIN 2024 CONFERENCE IN NASHVILLE pic.twitter.com/0qjyUO54VA

— Dylan LeClair 🟠 (@DylanLeClair_) July 10, 2024

And that has forced the Democrats to become less anti-crypto. And that could be putting pressure on the anti-crypto SEC to play nicer with the industry.

Should Trump win re-election, as is likely right now, a new SEC is to be expected anyway.