Circle noted that assets pegged to the U.S. dollar are not securities, partly because users are not expecting any profit from acquiring them.
Circle, the company that issued the USD Coin (USDC) stablecoin, has weighed in on the United States Securities and Exchange Commission (SEC) case against crypto exchange Binance, arguing that stablecoins are not securities.
In a court filing, Circle argued that assets that are pegged to the U.S. dollar, like the Binance USD (BUSD) or its own stablecoin USDC, are not securities, partly because those who purchase the assets are not expecting any profit from acquiring them. According to Circle, payment stablecoins do not have the “features of an investment contract” on their own.
On June 5, the SEC sued Binance for several alleged legal violations. The regulator pressed a total of 13 charges against the crypto exchange. This includes the sales of BNB (BNB) tokens and BUSD tokens, alleging that the stablecoin offering is an unregistered security. The SEC also said that Binance failed to register as a broker-dealer clearing agency and that it operated in the U.S. illegally.
On Sept. 22, Binance and its CEO Changpeng Zhao asked the court to dismiss the SEC lawsuit. Binance and Zhao claimed that the SEC had overstepped its authority in the lawsuit against them. In a petition, Binance and Zhao’s lawyers highlighted their belief that the SEC failed to introduce clear guidelines for the sector ahead of its lawsuit of the exchange and imposed its authority over the sector retroactively.
Related: Crypto lawyer about SEC: ‘Problematic to imply all NFTs are securities’
Apart from cryptocurrencies and exchanges, the SEC has also been going after nonfungible tokens (NFTs) and ruling that they are securities. On Aug. 28, the SEC filed a charge against entertainment company Impact Theory for the sales of its NFT collection. The SEC said that the NFTs were unregistered securities.
Apart from Impact Theory, the SEC also went after another firm for selling NFTs. On Sept. 13, the SEC charged the firm behind the Stoner Cats NFT collection. According to the SEC, the firm facilitated the sales of unregistered securities for offering the NFTs to the public.
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