Circle Intervenes In SEC’s Lawsuit Against Binance, Asserts Stablecoins Aren’t Securities ⋆ ZyCrypto

Circle Intervenes In SEC’s Lawsuit Against Binance, Asserts Stablecoins Aren’t Securities

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Weighing in on the Securities and Exchange Commission’s (SEC) lawsuit against leading crypto exchange Binance, stablecoin issuer Circle has argued that stablecoins are not securities.

Circle shared its stance on stablecoins in an amicus brief filed in district court in Washington, D.C.

Stablecoins Lack Features Of An Investment Contract: Circle

Circle has waded into the SEC vs. Binance case without taking either party’s side.

In a Thursday court filing, Circle argued that assets tied to the U.S. dollar, such as  Binance stablecoin BUSD and its own USDC, don’t qualify as securities because investors who purchase the assets are not anticipating any profits. As per Circle, stablecoins used as payment vehicles, on their own, “do not have the essential features of an investment contract,” and as such, do not fall under the SEC’s purview. Circle noted that the agency’s suit against Binance could have major implications on stablecoins as a whole.

In March, Commodity Futures Trading Commission (CFTC) chair Rostin Behnam maintained that stablecoins are commodities. Yet, SEC’s Gensler has previously slammed stablecoins. Last year, for instance, Gensler likened stablecoins to “poker chips”.

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SEC’s Allegations Against Binance

The SEC pressed charges against Binance in June. The regulator accused the exchange and its CEO, Changpeng Zhao, of operating illegally in the United States while commingling customer funds. The defendants were also accused of allowing American investors to trade cryptocurrencies, such as Solana’s SOL, Cardano’s ADA, and BUSD, which the SEC claimed were unregistered securities.

As Circle indicates in its court filing, the SEC’s legal action against Binance marked the first time the agency has alleged that stablecoins are securities in court. And probable ramifications for the exchange and BUSD could “have outsized legal and practical stakes”.

Last week, Binance and Zhao requested the court to disregard the SEC lawsuit. They asserted that the SEC had overstepped its power in the case against them. In the motion to dismiss, Binance and Zhao’s attorneys stressed their belief that the SEC failed to establish clear rules for the industry before lodging its lawsuit and retroactively imposed its authority over the market.

Source: https://zycrypto.com/circle-intervenes-in-secs-lawsuit-against-binance-asserts-stablecoins-arent-securities/