Circle Argues Stablecoins are Not Securities
Stablecoin issuer Circle has expressed its opinion on the Securities and Exchange Commission’s (SEC) lawsuit against Binance, stating that stablecoins should not be considered securities. The SEC claimed in its lawsuit that Binance USD (BUSD) was sold as an investment contract, making it a security due to its reward program. However, Circle’s filing argues that stablecoins lack the essential features of an investment contract and therefore cannot be classified as securities. Circle also highlighted that assets pegged to the dollar are not securities because buyers do not anticipate making a profit.
Binance’s Fight for Survival
The lawsuit against Binance poses a significant threat to the exchange’s existence in the US, leading to various challenges for the company. Binance.US has experienced a decline in trading volume, resulting in a 30% reduction in its workforce. In response, Binance and its CEO, Changpeng Zhao (CZ), have filed a motion to dismiss the SEC’s case, arguing that the regulatory body is exceeding its authority. They claim that the SEC is retroactively attempting to use its regulatory power without providing clear guidance on cryptocurrency.
The legal battle between Binance and the SEC is not over yet. Recently CEO Chanpgeng Zhao asked the court to dismiss the SEC suit.
Binance Holdings, it’s U.S. counterpart and CEO Changpeng Zhao have filed motions seeking the dismissal of a lawsuit against them by the Securities… pic.twitter.com/gBtxkqVn6Z— VK.BNB (@TheHongVan68) September 22, 2023
The motion filed by Binance and CZ argues that the SEC’s lawsuit has no basis in the current securities laws as the regulatory body had not established regulations for crypto products. They claim that the SEC is attempting to impose liability for crypto asset sales that occurred before any public guidance on cryptocurrency was provided. The defendants believe that the SEC’s actions are unjust and unsupported by existing regulations.
Hot Take: Circle Challenges SEC’s Classification of Stablecoins
Circle, a stablecoin issuer, has contested the Securities and Exchange Commission’s (SEC) classification of stablecoins as securities. In response to the SEC’s lawsuit against Binance, Circle argued that stablecoins lack the essential features of an investment contract and should not be considered securities. Additionally, Circle emphasized that stablecoins pegged to fiat currencies do not generate profits for buyers, further supporting their stance that these assets should not be classified as securities. The outcome of this legal battle will have significant implications for the regulation of stablecoins and their status as securities in the future.
Insa’s extensive background in the financial realm encompasses roles as a writer, trader, and personal finance coach. Her proficiency spans a wide spectrum, ranging from commodities and indices to forex and cryptocurrencies. Insa’s specialization lies in furnishing strategic investment advice tailored to the fintech investment niche.