Paxos, a blockchain infrastructure platform and the issuer of Binance’s stablecoin Binance USD (BUSD), is in talks with the U.S. Securities and Exchange Commission over its decision to consider the stablecoin a security.
In an email to employees, Paxos CEO Charles Cascarilla said Paxos is having “constructive discussions” with the commission over BUSD, adding that they will continue the conversation in private, Reuters reported.
“We are engaged in constructive discussions with the SEC, and we look forward to continuing that dialogue in private,” Cascarilla reportedly said, noting that the company is willing to defend its position that BUSD is not a security through litigation.
Paxos is the issuer of BUSD, a stablecoin associated with Binance, the world’s biggest cryptocurrency exchange. BUSD is pegged one-to-one with the U.S. dollar.
Last week, New York state regulators ordered Paxos to stop minting new BUSD tokens. In a consumer alert, the New York State Department of Financial Services said it issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”
Subsequently, it was revealed that the SEC had threatened to sue the company over its BUSD issuance. The agency argued that BUSD is considered an unregistered security.
Following the regulatory clampdown, Paxos announced that it would stop issuing new BUSD tokens from February 21, but would continue to support and redeem the tokens until at least February 2024.
In the email, Cascarilla said that decision to end the partnership with Binance comes as the relationship “no longer aligns with our current strategic priorities.” He added that communications with the NYDFS directive and the SEC over BUSD are not related to the partnership with Binance.
The Paxos CEO added that the company 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.
As reported, Binance is also looking beyond Paxos and dollar-based stablecoins amid increasing regulatory scrutiny in the US.
Patrick Hillmann, Binance’s chief strategy officer, said in an interview last week that multiple private and public entities have shown interest in collaborating with the exchange on launching another stablecoin, one that might not be dollar-based.
“There are very interesting opportunities, particularly in Europe and the Middle East,” Hillmann said in an interview with Forbes, without providing more details.
It is worth noting that Binance CEO Changpeng Zhao has also put forward the idea of the exchange issuing a non-dollar stablecoin. In a Twitter post, CZ said the company is exploring other issuers and non-USD-based stablecoins.
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