Paxos’ CEO, Charles Cascarilla, has expressed his disagreement with regulatory bodies’ views on BinanceUSD (BUSD), a stablecoin, being classified as a security. He stated that Paxos has always strived to maintain good relationships with regulators and comply with the law since its inception.
However, the US Securities and Exchange Commission (SEC) recently issued a Notice of Prosecution to Paxos over an unregistered offer of BUSD, demanding clarification on why the stablecoin should not be considered a security.
The New York State Department of Financial Services (NYDFS) has also instructed Paxos to stop issuing BUSD.
Despite this, Cascarilla has mentioned the Howey and Reeves tests, which are used by regulators to determine whether an asset can be considered a security. He is confident that BUSD does not meet the criteria to be classified as a security.
He emphasized that Paxos’ stablecoins are always backed by cash and cash equivalents, such as US Treasury bonds, but never by securities. He added that the company is in discussion with the SEC and is prepared to defend its position in court if necessary.
Cascarilla highlighted the success Paxos has achieved in securing over $2.8 billion in redemption since the end of BUSD issuance, without disrupting the market. He considers this a significant achievement and emphasized that Paxos remains focused on serving and protecting stablecoin holders, stating that the company will continue to support BUSD until at least February 2024.
In 2022, Cascarilla predicted that the demand for stablecoins would increase despite the high volatility of the crypto market, as they are well-suited for making payments.