Is Binance USD (BUSD), Passing The Howey Test Next US SEC Targeting Stablecoins

The U.S. Securities and Exchange Commission (SEC) continues to crack down on the digital asset marketplace. According to reports, the financial watchdog has warned the Paxos Trust Co. to inform it that it plans to sue the company for violating U.S. investor protection laws.
In a letter to Paxos, the U.S. SEC stated that Binance USD (BUSD) is a unregistered security. Legal experts found the SEC’s new claim suspicious and deficient. This raises the direct question: “Does the BUSD meet The Howey Test?”


BUSD A Security?
Adam Cochran raised concerns about the latest claim by the SEC in a Twitter thread. The commission is trying to claim that the BUSD can be considered a security by bringing in the Howey Test. This test determines whether a transaction qualifies for an “investment contract”.
This suggests that the SEC believes there is a expectation of “profit” from investing in a stablecoin. Experts state that “Securities” is a much wider category, which is being defined under the 1933 Securities Act. The Commission’s actions show how vague the act is. You can read more US SEC News here…

Assets such as debenture and certificate of interest, evidences of indebtedness, and more are backed by treasuries, making them more like money market funds. Even though they don’t earn any income from the security, this exposes holders to it. This argument also suggests that they could be considered security.
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SEC Moving in the Right Direction
Experts suggest that bragging about the SEC’s mistakes, such as BUSD failing the Howey Test, is a mistake. The commission has highly qualified securities counsel.


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The question is, how can security be earned if it doesn’t make money? Security does not need to be good or lucrative.
Cochran suggested that when one holds or secures a value for someone, you are trusting them to do so and not exempted from it. It is a security.

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