The company behind the USD Coin stablecoin, Circle, argues that assets pegged to the U.S. dollar are not securities. Circle argued that stablecoins are not securities in response to the case brought by the US Securities and Exchange Commission (SEC) against the cryptocurrency exchange Binance, partly because users do not expect any profit from acquiring them.
Circle, in a court filing, noted that assets such as Binance USD (BUSD) or USDC, which are backed by the U.S. dollar, are not securities because those who purchase the assets do not expect 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. A total of 13 charges were pressed by the regulator against the crypto exchange, which include the sale of unregistered security sales for BNB tokens and BUSD tokens, among other charges. The SEC also claims that Binance operated illegally in the United States and failed to register as a broker-dealer clearing agency.
However, on Sept. 22, Binance and its CEO Changpeng Zhao asked the court to dismiss the SEC lawsuit, claiming that the SEC had overstepped its authority. Binance and Zhao’s lawyers highlighted their belief in a petition, stating that the SEC failed to introduce clear guidelines for the sector prior to its lawsuit against the exchange and imposed its authority retroactively over the industry.
Apart from cryptocurrencies and exchanges, the SEC has also claimed that nonfungible tokens (NFTs) are securities. On Aug. 28, the SEC filed charges against entertainment company Impact Theory for the sales of its NFT collection. The SEC stated that the NFTs are unregistered securities.
In addition to 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 by offering the NFTs to the public.
Read also: Coinbase International introduces retail perpetual futures trading
