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Circle, the issuer of USD Coin (USDC) stablecoin, filed a court argument on Friday, arguing that assets pegged to the U.S. dollar, such as Binance USD (BUSD) or USDC, should not be considered securities. The company's position is based on the premise that purchasers of these assets do not anticipate profit from their acquisition and that payment stablecoins lack the "features of an investment contract."
This argument forms part of the ongoing legal dispute between the U.S. Securities and Exchange Commission (SEC) and crypto exchange Binance. Back on June 5, the SEC initiated legal proceedings against Binance, alleging multiple legal violations, including 13 charges related to the sales of BNB tokens and BUSD tokens. The regulator contends that Binance's stablecoin offering constitutes an unregistered security, and further accuses the exchange of operating illegally in the U.S. without proper broker-dealer clearing agency registration.
On September 22, Binance and its CEO Changpeng Zhao responded by requesting the court to dismiss the SEC lawsuit. They argue that the SEC has overreached its authority in this case. Their petition emphasizes their belief that the SEC failed to provide clear sector guidelines before launching the lawsuit and imposed its authority retroactively.
Circle's recent court filing is in line with its previous stance on stablecoin regulation. In February, Circle CEO Jeremy Allaire suggested that stablecoins should fall under banking regulators' jurisdiction rather than being overseen by the SEC. This statement was made in response to the SEC's lawsuit against Paxos for its role in issuing BUSD, which the commission classified as a security.
The SEC's approach to cryptocurrencies extends beyond exchanges and includes nonfungible tokens (NFTs). On August 28, it charged entertainment company Impact Theory over sales of its NFT collection, labeling them as unregistered securities. Similarly, on September 13, the SEC charged the company behind the Stoner Cats NFT collection, asserting that the firm's offering of NFTs to the public constituted sales of unregistered securities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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