Stablecoin issuer Paxos is having a "constructive discussion" with the U.S. Securities and Exchange Commission (SEC), Chief Executive Officer Charles Cascarilla told the company over the weekend.
The note surfaced a week after Paxos acknowledged receiving a Wells Notice from the SEC. A Wells Notice is a tool used by the SEC to allege certain activity may be a violation of federal securities law, and may indicate the SEC intends to sue.
Paxos' notice was tied to the company's issuance of Binance USD (BUSD), a branded stablecoin product. The Pax dollar (USDP), the company's own stablecoin product, was not included. Paxos has already announced it will stop issuing BUSD after receiving a notice from the New York Department of Financial Services, the state regulator overseeing it.
Since the introduction of BUSD in 2019, "the market has evolved and the Binance relationship no longer aligns with our current strategic priorities," Cascarilla said in the note. "We announced on Monday that we're ending the relationship with Binance."
Since announcing the halt in issuance, Paxos has facilitated more than $2.8 billion in BUSD redemptions with no significant market disruptions, he said.
The SEC has been accelerating its crackdown on crypto companies the agency believes are violating federal law. In the last few weeks, it's settled charges that Kraken's staking services product was an unregistered securities offering; settled charges with National Basketball Association Hall of Famer Paul Pierce alleging he didn't disclose being paid to promote a token; and sued Gemini, Genesis and Terraform Labs (Genesis and CoinDesk share a parent company in Digital Currency Group).
Paxos, meantime, is working with regulators to enhance its standing.
"We are working with the SEC towards the publication of our Clearing Agency application," Cascarilla wrote. "We are working with the OCC to move our conditional approval into an operationalized and launched National Trust. 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."
Cascarilla's note was according reported earlier by Reuters.
UPDATE (Feb. 21, 15:11 UTC): Changes sourcing to CEO note; adds quotes in fourth, last paragraphs.
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