Paxos CEO defends BUSD against SEC notice

02/22/2023 05:37 • Blockchain Buzz • 140 views

It is reported that Charles Cascarilla, CEO of Paxos, raised an objection to the unilateral “Wells Notice” issued by the Securities and Exchange Commission of the United States, which said that BUSD was a kind of security, and pointed out that according to the Howey test and the Reves test, BUSD did not meet the security standards, because the stable currency was always supported by cash and equivalents (such as US dollars and US bonds), He also said that Paxos had so far contributed more than US $2.8 billion in BUSD redemptions and did not disrupt the encryption market. In the future, it may “defend its litigation status” and will “actively file a lawsuit against the Securities and Exchange Commission when necessary”. In addition, Charles Cascarilla revealed that Paxos was applying to the United States Office of the Comptroller of the Currency (OCC) to obtain a banking license. （CryptoSlate）

Paxos CEO: applying for bank license to OCC, which has led to the redemption of more than US $2.8 billion BUSD and has not disturbed the encryption market

Interpret the above information:

In the cryptocurrency world, stablecoins are gaining popularity due to their low volatility and reliability as a measure of value. The BUSD, a stablecoin issued by Paxos, has recently come under scrutiny from the Securities and Exchange Commission (SEC) of the United States. In response, Charles Cascarilla, the CEO of Paxos, has raised an objection to the SEC’s unilateral “Wells Notice” and defended the BUSD against the notice.

Cascarilla stated that according to the Howey test and the Reves test, BUSD did not meet the security standards, as it is always supported by cash and equivalents, such as US dollars and US bonds. The Howey test is a legal test that determines whether a transaction qualifies as an investment contract, which is a type of security. The Reves test is a legal test that determines if a note qualifies as a security, which is a type of investment contract. Cascarilla emphasized that Paxos has contributed over $2.8 billion in BUSD redemptions and that the stablecoin did not disrupt the cryptocurrency market.

Furthermore, Cascarilla revealed that Paxos has applied to the United States Office of the Comptroller of the Currency (OCC) to obtain a banking license. By obtaining a banking license, Paxos can operate as a regulated financial institution and provide more services to its customers. This move is also an indication of Paxos’ commitment to regulatory compliance and transparency in its operations.

Paxos’ defense of BUSD against the SEC’s notice highlights the ongoing debate on whether stablecoins should be classified as securities. The SEC’s notice raises concerns about the regulatory status of stablecoins, which may affect their adoption and use in the market. However, Paxos’ arguments, based on legal tests, demonstrate that BUSD does not meet the criteria to be classified as a security.

In conclusion, Paxos’ objection to the SEC’s notice and its application for a banking license demonstrate the company’s commitment to regulatory compliance and transparency in its operations. The cryptocurrency market is still evolving, and regulatory authorities need to strike a balance between fostering innovation and protecting investors. The case of BUSD is an example of how the regulatory status of stablecoins is still being debated, and it will be interesting to see how it evolves in the future.

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