Filing a brief for amicus curiae in the United States District Court, for the District of Columbia on 28th of September 2023, Circle Internet Financial LLC has now officially entered the lawsuit of Securities and Exchange Commission v. Binance Holdings Ltd. et al., as a ‘friend of the court’ to provide important information or advice regarding questions of fact or question of law.
Important Statement as by Circle an Amicus Curiae
Circle, in its brief, stated that “Payment stablecoins, on their own, do not have the essential features of an investment contract”.
“Decades of case law support the view that an asset sale — decoupled from any post-sale promises or obligations by the seller — is not sufficient to establish an investment contract”, as quoted from Circle’s stand.
Circle continues by claiming that years of case law support the idea that an asset sale that is unconnected from any obligations or responsibilities of the seller once the sale is complete is insufficient to create an investment contract. The argument assumes great importance for understanding Circle’s position on why stablecoins shouldn’t be classified as securities.
Weightage of Circle’s Statements
This argument is crucial in the context of stablecoins because if they are not considered securities, they would not fall under the regulatory oversight of the Securities and Exchange Commission (SEC).
Circle argues that stablecoins, such as their own USDC, are simply digital representations of traditional fiat currencies and do not possess the characteristics of investment contracts. By emphasizing the lack of ongoing obligations or responsibilities for the seller, Circle aims to establish that stablecoins should not be subjected to the same regulatory scrutiny as securities.
What’s Next?
While SEC Chair Gary Gensler himself struggled to answer whether an investment contract requires a basic contract, Circle’s position as an amicus curiae and its vital advice can give a strong weightage on Binance’s chances to win.
Source: https://coinpedia.org/news/circle-steps-in-as-amicus-in-the-sec-vs-binance-lawsuit/