Circle Steps Into Binance’s SEC Case Arguing in Favor of Stablecoins
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Circle has intervened in Binance’s SEC case, arguing that stablecoins are not securities.
The company, backed by former commodities regulator Heath Tarbert, argues that stablecoins don’t fall under the category of securities. They contend for their exemption from financial trading laws.
Circle is making a case that stablecoins, tied to other assets’ value, should be exempt from financial trading laws. This position is a response to the SEC’s accusations against Binance.
The SEC is accusing Binance of facilitating trades in cryptocurrencies like SOL, ADA, and the Binance stablecoin BUSD. They allege that these are unregistered securities, as they lack the necessary registration.
Expectations of Circle Profit
Emphasizing the nature of stablecoins, Circle points out that users do not anticipate profits from their standalone purchases, further invalidating their classification as securities. The company’s filing mentions, “Payment stablecoins, on their own, do not have the essential features of an investment contract.”
This argument hinges on many years of legal precedents. These precedents support the notion that selling an asset, without any further commitments or obligations post-sale by the seller, doesn’t create an investment contract.
Binance and its affiliates have pushed back against the SEC’s allegations, seeking to dismiss the case. They contend that the SEC is inappropriately asserting authority over digital assets without the requisite authorization from Congress. The exchange, alongside others like Coinbase, is actively working to establish that cryptocurrencies do not fall under the purview of existing U.S. financial regulations.
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