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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 behind 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 pegged to the U.S. dollar, such as Binance USD (BUSD) or USDC, are not securities 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. Charges include the sale of BNB (BNB) tokens and BUSD tokens being unregistered security sales. The SEC also claims that Binance failed to register as a broker-dealer clearing agency and that it operated illegally in the United States.
On Sept. 22, Binance and its CEO Changpeng Zhao asked the court to dismiss the SEC lawsuit. Binance and Zhao claimed 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 industry retroactively.
Apart from cryptocurrencies and exchanges, the SEC has also claimed nonfungible tokens (NFTs) 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 are unregistered securities.
Apart from Impact Theory, 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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