There has been a significant development in the case initiated by the United States Securities and Exchange Commission (SEC) against the cryptocurrency exchange Binance and its CEO Changpeng Zhao in June. Circle, the company behind the stablecoin USDC, has decided to intervene in this legal process and argued that stablecoins should not be considered securities.
SEC Alleged that BUSD Was Sold as an Investment Contract
The SEC had previously filed a lawsuit alleging that Binance’s affiliate BAM Trading sold unregistered securities. Among these securities were Binance’s own token BNB and the stablecoin BUSD. Furthermore, the SEC claimed that BUSD was sold as an investment contract because Binance marketed BUSD to generate returns through reward programs.
“Payment stablecoins do not inherently possess the key features of an investment contract, which means they fall outside the jurisdiction of the SEC.”Circle
They Argue that SEC Should Not Be Involved in This Case
However, in a filing made yesterday, Circle stated that stablecoins do not possess the characteristics of securities and, therefore, the SEC should not be involved in this case. Additionally, Circle argued that stablecoins are primarily designed for payments and do not have the features required by an investment contract.
This development is also seen as a reflection of the long-standing debate between the crypto world and financial regulators. Stablecoins are known for having a fixed value tied to traditional fiat currencies, but this has consistently created uncertainty among regulators about whether they should be classified as securities or payment instruments.