Last week, the SEC sent shockwaves across the crypto industry as news leaked that it was charging Paxos for issuing an unregistered security in its BUSD stablecoin—an allegation that the company “categorically disagrees with.” The Securities and Exchange Commission has offered no explanation as to how BUSD, which Paxos claims to be fully backed and fully redeemable, could constitute a security. Nor has it offered any guidance to other stablecoin providers.
Stablecoins—cryptocurrencies pegged to the value of the U.S. dollar—are among the most disruptive technologies to emerge from digital finance in the last decade. But the SEC is on the warpath against them. With rumors that the federal government may now regulate stablecoins as securities, PayPal—the world’s largest online payment processor—recently put development of its own stablecoin on hold.
