Circle Challenges SEC’s Assertion on Crypto Assets
Circle, the issuer of the stablecoin USDC, has submitted an amicus curiae brief in the U.S. Securities and Exchange Commission’s (SEC) case against Binance, disputing the SEC’s claim that most crypto assets are securities.
In its brief, Circle argues that stablecoins, which are crypto assets pegged 1:1 to the US dollar and used for payments and settlements, should not fall under the SEC’s regulatory purview. The company emphasizes that these assets lack the essential features of an investment contract and do not offer potential profits based on the issuer’s efforts.
Circle contends that sales of payment stablecoins should be considered asset sales and not investment contracts, as established by decades of case law. However, while advocating for stablecoins to be outside of the SEC’s jurisdiction, Circle also acknowledges the need for a robust regulatory framework to protect consumers and US financial stability.
Circle Aims to Educate on Stablecoin Nature
The purpose of Circle’s brief is to provide clarity on the nature of stablecoins. The SEC alleges that Binance engaged in the illegal offering and sale of an unregistered security by not registering its Binance USD (BUSD) stablecoin with the securities watchdog.
Circle clarifies that its submission does not support either party but seeks to assist the court in understanding stablecoins’ status under federal securities laws. The company believes that addressing these legal questions is crucial for digital currency and the broader US economy.
A Call for a Sound Regulatory Regime
While Circle argues that payment stablecoins should be exempt from SEC regulation, it emphasizes the importance of a sound regulatory regime to protect consumers and maintain US financial stability when it comes to dollar-pegged crypto assets.
Hot Take: Circle Asserts Stablecoins Are Not Securities
Circle challenges the SEC’s assertion that stablecoins are securities, arguing that they lack the essential features of an investment contract and do not offer potential profits based on the issuer’s efforts. The company believes that stablecoins should be outside the SEC’s jurisdiction, but it also calls for a strong regulatory framework to ensure consumer protection and financial stability. Circle submitted its brief in the SEC’s case against Binance to shed light on the nature of stablecoins and address legal questions surrounding their status under federal securities laws.
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