Stablecoin issuer Paxos in ‘constructive discussions’ with SEC

Paxos Trust Company, the issuer of dollar-pegged stablecoins BUSD (BUSD-USD) and pax dollar (USDP-USD), is holding “constructive discussions” with the U.S. Securities and Exchange Commission about a week after receiving a Wells Notice from the regulator, according to an internal email viewed by Seeking Alpha on Tuesday.

The talks come after Paxos was ordered by the New York Department of Financial Services last week to stop the issuance of new Binance-branded stablecoins (BUSD-USD). At around the same time, the company acknowledged the SEC’s intension to sue for allegedly minting BUSD as an unregistered security.

“The market has evolved and the Binance relationship no longer aligns with our current strategic priorities,” Paxos CEO Charles Cascarilla said in an email sent over the weekend to employees. BUSD, the third largest stablecoin with some $16B tokens in circulation, was introduced to the market in 2019.

Since halting the issuance of BUSD earlier this month, Paxos has facilitated more than $2.8B of BUSD redemptions “with no significant market disruptions,” he said.

In addition, Cascarilla said that Paxos is still working with the SEC towards the publication of its application to get a clearing agency license, and with the U.S. Office of the Comptroller of the Currency to get a green light for its national bank charter.

“We are also working to expand our Singapore products in consultation with the MAS following our Payment Service Provider approval last year. We continue to pursue each of these plus any other opportunities for productive collaboration with regulators,” he added.

An SEC spokesperson declined to comment.

In the wake of increased regulatory scrutiny of crypto, the NYDFS earlier said it bolstered its ability to detect illicit crypto activity through certain risk monitoring tools.