USDC issuer Circle recently submitted a filing advocating for stablecoins. The firm contended that this particular asset niche should not be categorized as ‘securities.’ Circle’s filing marks the firm’s intervention in the SEC’s lawsuit against the world’s largest exchange, Binance. To be more specific, the filing falls under the ‘amicus curiae’ or friend of the court category. The filing was made in part by Circle’s Chief Legal Officer, Heath Tarbert. Interestingly, he has served as the Chair of the CFTC in the past.
Also Read: Chainlink’s 33% Recovery May Trigger Positive Q4 2023
Stablecoins Don’t Have ‘Investment Contract’ Features: Circle
In Q2 2022, the SEC filed a lawsuit against Binance and its executive, Changpeng Zhao, for securities law violations. The regulator accused the exchange of mishandling customer funds. Additionally, it also blamed the exchange for allegedly lying to both regulators and investors regarding its operations. The agency further went on to deem a host of tokens as securities. Notably, Stablecoin BUSD was on the list.
Circle has now contended that stablecoins should not fall under the ambit of the broader financial trading laws. Specifically, it argued that assets pegged to the dollar, like BUSD and USDC, should not be classified as securities. One of the reasons it cited to justify its argument was that stablecoin users do not expect any profit from standalone purchases of such assets. The firm further contended,
“Payment stablecoins, on their own, do not have the essential features of an investment contract. Decades of case law support the view that an asset sale—decoupled from any post-sale promises or obligations by the seller—is not sufficient to establish an investment contract.”
Also Read: Bitcoin Cash Up 8%: Can Bulls Push BCH to $250?
Alongside Binance, the SEC is also pursuing legal action against Coinbase. In its lawsuit against this exchange, the regulatory agency deemed SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO to be securities. Coinbase has been seeking regulatory clarity in this regard. It recently pointed out that the U.S. was an ‘outlier’ and has not been making any progress on the regulatory front. Contrarily, 83% of the G20 members and top financial hubs have made progress, it claimed.
Also Read: PYUSD: Crypto.com Partners With PayPal, Paxos