BUSD stablecoin issuer Paxos has terminated its relationship with Binance as it engages in conversations with the U.S. Securities and Exchange Commission (SEC) over a recent Wells notice.
Paxos CEO Charles Cascarilla today confirmed that the stablecoin issuer ended its relationship with Binance due to misaligned goals.
Paxos CEO Says Relationship With Binance Diverges From ‘Strategic Priorities’
According to an internal email viewed by Axios, the Paxos chief said, “The market has evolved and the Binance relationship no longer aligns with our current strategic priorities.”
He added that the decision was unrelated to recent regulatory shake-ups by the New York Department of Financial Services and the SEC, despite the NYFSD recently ordering Paxos to sever ties with Binance stop minting the Binance-branded BUSD stablecoin. At the same time, the SEC issued the firm a Wells Notice alleging that BUSD is, in the agency’s view, an unregistered security.
Following the NYFSD order, investors redeemed $2.8 billion worth of BUSD through Paxos. Decentralized exchange Curve showed an influx of BUSD and a reduction in Tether liquidity as investors dumped the Binance-branded coin.
Paxos is also engaged in private discussions with the SEC, despite disagreeing with the agency’s findings. Cascarilla reassured BUSD holders that Paxos would honor BUSD redemptions until at least Feb. 2024.
SEC Commissioner Calls Recent Enforcement Action ‘Unimaginative’
Following the SEC’s enforcement actions against crypto firms, including BlockFi, Genesis, and Kraken, SEC Commissioner Hester Peirce said in a recent interview with Frank Chapparro that she disagrees with the SEC’S method of bringing bad crypto actors to book.
Instead, she suggests a different approach involving a registration process satisfying securities laws that might serve investors better.
“Individual service providers can come in and register, and then in the process of registering, deal with the unique aspects of their programs,” she said. In other words, each registrant would answer generic questions “uniformly,” before discussing any novel product features.
“That’s a much better way than coming up after the fact with an enforcement action,” she noted. If investor programs are just about shutting programs down so that a certain demographic can’t access the program, “that’s a very unimaginative form of investor protection,” she argues.
All opinions expressed were her own and not the SEC’s, she emphasized.
Peirce is one of five commissioners who vote on rules that the SEC drafts based on existing securities laws. SEC Chair Gary Gensler sets the agency’s rulemaking agenda. The five commissioners also decide on enforcement or settlement actions through a democratic vote.
Peirce recently dissented from the SEC’s recent enforcement action against crypto exchange Kraken but clarified that her description of the agency as “a paternalistic and lazy regulator” did not apply to any individual within the SEC.
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