Paxos, the stablecoin issuer, is reportedly engaged in constructive discussions with the US Securities and Exchange Commission (SEC), according to CEO Charles Cascarilla.
This follows Paxos’ acknowledgment of receiving a Wells Notice from the SEC, which is used to flag possible violations of federal securities law and can indicate an intention to sue.
The Wells Notice was specifically tied to Paxos’ issuance of Binance USD (BUSD), a stablecoin product. However, the company’s own stablecoin product, Pax Dollar (USDP), was not included in the notice.
In response, Paxos has already stated that it will stop issuing BUSD after receiving a notice from the New York Department of Financial Services, which is the state regulator overseeing the company.
Cascarilla notes that since the introduction of BUSD in 2019, “the market has evolved, and the Binance relationship no longer aligns with our current strategic priorities.”
In fact, Paxos has already facilitated over $2.8 billion in BUSD redemptions since halting the issuance of the stablecoin with no significant market disruptions.
The SEC has been stepping up its enforcement against crypto companies that it believes are breaking federal law. In recent weeks, it has settled charges with Kraken’s staking services, NBA Hall of Famer Paul Pierce, and sued Genesis, Gemini, and Terraform Labs.
However, Paxos is taking a different approach, working with regulators to enhance its standing and pursuing opportunities for productive collaboration.
Cascarilla notes that the company is working with the SEC towards the publication of its Clearing Agency application, moving its conditional approval with the OCC into an operationalized and launched National Trust, and expanding its Singapore products with the MAS following its Payment Service Provider approval last year.
Paxos is committed to pursuing these opportunities and any other chances for regulatory collaboration that may arise.
