Circle Advocates for Stablecoins in Binance’s Ongoing SEC Lawsuit
- Carleton Nitzsche
- September 29, 2023
- News, Crypto, Cryptonews
- Circle, SEC Lawsuit, Stablecoin
- 0 Comments
Coinbase faces regulatory and market challenges but continues to expand. CEO Brian Armstrong notes U.S. regulatory ambiguity.
- Circle has intervened in the ongoing SEC lawsuit against Binance, arguing in favor of the status of stablecoins as non-securities.
- The company, which is backed by former commodities regulator Heath Tarbert, maintains that stablecoins should be exempt from financial trading laws.
- Circle’s argument focuses on the premise that users do not anticipate profits from stablecoin purchases, thus invalidating their classification as securities.
- Binance, along with other exchanges like Coinbase, is pushing back against SEC’s allegations and working to establish that cryptocurrencies do not fall under existing U.S. financial regulations.
In the midst of the Securities and Exchange Commission (SEC)’s legal pursuit of Binance, Circle, the issuer of the stablecoin USDC, has entered the fray, ardently arguing that stablecoins are not securities and therefore should not be subjected to financial trading laws.
The intervention by Circle, a company supported by former commodities regulator Heath Tarbert, counters the SEC’s accusations against Binance. The SEC alleges that Binance facilitated trades in cryptocurrencies like SOL, ADA, and its own stablecoin BUSD without the proper registrations, classifying them as unregistered securities.
— GemX News (@gemxnews) September 29, 2023
Circle on the Role
Circle is putting forth the notion that stablecoins, due to their tether to the value of other assets, should not be seen as avenues for profit by their users and, therefore, should not be classified as securities. The argument rests on years of legal precedents, which uphold the idea that the sale of an asset, without the seller having further commitments or obligations post-sale, does not constitute an investment contract.
Binance and its affiliates are not taking the SEC’s accusations lightly, contending that the SEC is overreaching its authority on digital assets without clear congressional authorization. Alongside exchanges like Coinbase, Binance is actively striving to clarify that cryptocurrencies are not encompassed by current U.S. financial regulations.
Circle stepping into Binance’s SEC case highlights the escalating tensions and ambiguities surrounding the classification and regulation of cryptocurrencies, particularly stablecoins. The outcome of this case could have significant implications for the crypto industry, potentially shaping regulatory approaches to stablecoins and other cryptocurrencies in the future.
If the argument posed by Circle and Binance finds favor in the legal system, it may pave the way for a more accommodative regulatory environment for stablecoins and could act as a precedent for other cases involving the classification of cryptocurrencies. However, if the SEC’s stance is upheld, it might lead to more stringent regulatory scrutiny and could impede the growth and innovation in the cryptocurrency sector.
Regardless of the outcome, the necessity for clear, comprehensive, and adaptive regulatory frameworks for cryptocurrencies is evident, ensuring the protection of users and fostering innovation and development in the rapidly evolving digital assets landscape.