Circle’s Perspective on Stablecoins
Circle, the entity responsible for the USD Coin (USDC), has voiced its opinion regarding the United States Securities and Exchange Commission’s (SEC) ongoing lawsuit against the cryptocurrency exchange, Binance. Central to Circle’s argument is the idea that stablecoins, by nature, aren’t securities.
Are Assets Pegged to the U.S. Dollar Securities?
In the court’s documents, Circle firmly posits that dollar-pegged assets such as Binance USD (BUSD) and its own USDC do not fit the mold of securities. This is primarily due to the fact that those investing in these assets aren’t looking to make a profit directly from their purchase. To Circle’s point, payment-centric stablecoins simply don’t exhibit the hallmarks typically associated with “investment contracts.”
Background: The SEC’s Charges Against Binance
On the 5th of June, the SEC initiated a lawsuit against Binance, levying a myriad of legal accusations against the exchange. Out of the claims, 13 charges were put forth, some of which condemned the sale of Binance’s BNB and BUSD tokens as unregistered security sales. Furthermore, the SEC contends that Binance did not register as a broker-dealer clearing agency and that its operations within the U.S. were unauthorized.
Binance’s Counter Argument
Binance, alongside its CEO Changpeng Zhao, responded to these allegations on September 22nd, urging the court to dismiss the SEC’s claims. Both the exchange and its CEO assert that the SEC has overstepped its jurisdiction. The defense lawyers emphasized the SEC’s lack of clarity in the crypto industry’s guidelines, suggesting the regulator is imposing its control retroactively.
The SEC’s Broader Stance on Digital Assets
Binance isn’t the SEC’s only target when it comes to digital assets. The regulator has also expressed views that nonfungible tokens (NFTs) should be classified as securities. This perspective became evident on August 28 when the SEC leveled charges against entertainment enterprise, Impact Theory, over their NFT sales. Just a few weeks later, on September 13, the SEC targeted the creators of the Stoner Cats NFT collection, accusing them of facilitating the sale of unregistered securities through their NFT offerings.