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Potential Impact of SEC Lawsuit on Stable Currency Market

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On February 20, it was reported that if the United States Securities and Exchange Commission formally filed a lawsuit against Paxos, it would have a significan…

Potential Impact of SEC Lawsuit on Stable Currency Market

On February 20, it was reported that if the United States Securities and Exchange Commission formally filed a lawsuit against Paxos, it would have a significant impact on the stable currency market worth 137 billion dollars. Renato Mariotti, partner of the law firm BCLP, said: “If the SEC accuses Paxos, any other stable currency issuer should register or prepare to fight a lawsuit with the SEC.” Mariotti said: “I believe that the SEC is likely to reach a settlement with Paxos. Paxos acknowledges that BUSD is a kind of security, which leads to other stable currencies to follow and register. However, Paxos may actively sue the SEC, but the cost of doing so will be huge. The litigation will take several years, and the risk of losing to the SEC is very high. The fact that Paxos confronts the SEC will create risks in itself, and may reduce the attractiveness of BUSD to the market.” Mariotti said that another result is that, The SEC may regulate the assets used to support the stable currency and the requirements for digital currency issuance to disclose information to the market.

CNBC: If the US SEC formally sues Paxos, it will have a significant impact on other stable currencies

Interpretation of the news:


The United States Securities and Exchange Commission (SEC) may file a lawsuit against Paxos, a stable currency issuer, which could have significant implications for the entire stable currency market worth 137 billion dollars. Renato Mariotti, a partner of the law firm BCLP, suggests that if the SEC accuses Paxos, other stable currency issuers should either register or face a potential lawsuit with the SEC.

Mariotti predicts that the SEC is likely to reach a settlement with Paxos. Furthermore, if Paxos does not want to register, it may actively sue the SEC, but the costs of litigation will be astronomical. In this case, the litigation could take years, and the risk of losing against the SEC is high. This will create another risk itself, which may reduce the attractiveness of BUSD (Paxos stablecoin) to the market.

The potential for regulation in the stable currency market and its assets backing the coins is another impact expected from this case. The SEC may require stable currency issuers to disclose their digital assets’ information to the market better. This could lead to improved transparency in the sector, which is currently limited. Regulations can also limit the speculative activities and institutional investors’ manipulation and protect retail investors from Ponzi schemes.

It is interesting to note that Paxos acknowledges that BUSD is a security. It is possible that Paxos may use this acknowledgment as a way to circumvent any regulatory measures that the SEC may impose.

In conclusion, the development of stable currencies in recent years has brought new challenges to the traditional regulatory framework. With the SEC stepping forward to regulate stable currencies, it could bring more legitimacy to this sector. However, as we are reminded by the potential lawsuit with Paxos, regulatory action can significantly impact the market’s stability. It will be worth keeping an eye on the developments in the coming months.

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