{"id":165366,"date":"2023-09-29T23:02:10","date_gmt":"2023-09-29T17:32:10","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=165366"},"modified":"2023-09-29T23:02:10","modified_gmt":"2023-09-29T17:32:10","slug":"stablecoins-arent-securities-says-circle-in-sec-lawsuits-against-binance-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/stablecoins-arent-securities-says-circle-in-sec-lawsuits-against-binance-crypto-news\/","title":{"rendered":"Stablecoins Aren’t Securities, Says Circle in SEC Lawsuits Against Binance – Crypto News"},"content":{"rendered":"
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Stablecoin issuer Circle argued that tokens pegged to the price of a sovereign currency, such as the U.S. dollar, are not securities, according to a court document filed Thursday.<\/p>\n

Weighing in on the Securities and Exchange Commission\u2019s (SEC) lawsuit against Binance, Circle outlined its stance on stablecoins\u2014without taking either party\u2019s side\u2014in an amicus brief filed in district court in Washington, D.C.<\/p>\n

Known primarily as the issuer of USD Coin (USDC), Circle is behind crypto\u2019s second-largest stablecoin by market cap that\u2019s worth around $26 billion, according to CoinGecko<\/a>. And the SEC\u2019s lawsuit against Binance could have ramifications for stablecoins as a whole, Circle said.<\/p>\n

The SEC sued<\/a> Binance in June. It accused the exchange and CEO Changpeng Zhao of operating illegally in the U.S. while misusing customer funds. The holding company for Binance\u2019s U.S.-based affiliate, BAM Management, was also wrapped up in the enforcement action.<\/p>\n

Alleging Binance offered investors unregistered securities, America\u2019s financial watchdog highlighted Binance USD (BUSD)\u2014a Binance-branded stablecoin formerly issued by New York firm Paxos\u2014as an example. The token was one of several offerings the SEC took issue with, including Binance\u2019s exchange token, Binance Coin (BNB).<\/p>\n

As Cricle notes in its filing, the SEC\u2019s enforcement action against Binance represented the first time the regulator has claimed stablecoins are a security in court. And potential implactions for Binance and BUSD could \u201chave outsized legal and practical stakes,\u201d Circle wrote in its brief.<\/p>\n

\u201cPayment stablecoins, on their own, do not have the essential features of an investment contract,\u201d Circle said, referencing the agency\u2019s four-pronged approach<\/a> for determining whether an offering warrants SEC oversight.<\/p>\n

According to the SEC, a core element<\/a> of its approach for gauging whether something is a security is the \u201creasonable expectation of profits.\u201d Because stablecoins are \u201credeemable at a constant value,\u201d Circle argues that stablecoins on their own don\u2019t meet the standard.<\/p>\n

The context surrounding how BUSD was offered to investors is central to the SEC\u2019s allegations, Circle notes. In its complaint, the SEC takes issue with how Binance marketed BUSD as an offering that could generate returns based on an annual percentage yield.<\/p>\n

\u201cNowhere in the complaint does the SEC allege that such stablecoins, standing alone, are securities,\u201d Circle’s attorneys write. \u201cInstead, the SEC alleges that Binance took additional steps that collectively turned BUSD sales into investment contracts.\u201d<\/p>\n

Additionally, Circle argued that stablecoins\u2014primarily as payments vehicle\u2014don\u2019t resemble financial instruments found to be securities while highlighting their utility. Circle said: \u201cPeople do not use a stock certificate to buy pizza, for example.\u201d<\/p>\n

Some stablecoins effectively place a digital wrapper around the U.S. dollar, and the SEC\u2019s opinion on whether that process turns something into a security was called into question earlier this week. New York Representative Ritchie Torres pressed SEC Chair Gary Gensler on a regulatory hypothetical regarding Pok\u00e9mon cards<\/a> represented by a digital token.<\/p>\n

Rostin Behnam, Chair of the Commodity Futures Trading Commission, suggested<\/a> stablecoins are commodities in March. But Gensler has scrutinized stablecoins in the past. Last year, America\u2019s top financial cop compared stablecoins to \u201cpoker chips<\/a>,\u201d commonly used by traders to lock in potential profits.<\/p>\n

At the same time, Federal Reserve Chair Jerome Powell suggested stablecoins should be regulated \u201cin comparable ways<\/a>\u201d to bank deposits and money market funds back in 2021.<\/p>\n

Circle\u2019s opinion comes as lawmakers look to potentially regulate stablecoins, since Meta\u2019s defunct Libra project perked<\/a> lawmakers ears in 2019. As Kristin Smith, CEO of the Blockchain Association told<\/a> Decrypt<\/i> last week: \u201cThere is a pathway to get legislation passed this year.\u201d<\/p>\n

Binance and USDC Have Some History<\/p>\n

Binance gave Circle\u2019s namesake the cold shoulder<\/a> last September. The exchange said it would stop supporting USDC on its platform and automatically convert customers\u2019 deposits of the token to BUSD.<\/p>\n

The move impacted other stablecoins on Binance\u2019s platform as well: Pax Dollar (USDP) and TruesUSD (TUSD). Alongside the changes, Binance said spot trading, futures, and margin lending would cease for the three stablecoins as well.<\/p>\n

At the time, Binance said the move would help improve liquidity and capital efficiency for users. Less than a month later, $683 million<\/a> worth of USDC sat on Binance\u2019s exchange, according to blockchain analytics firm Nansen, compared to $20 billion BUSD and $5 billion Tether (USDT).<\/p>\n

Still, users were able to withdraw funds from Binance in their stablecoin of choice. Binance has also moved since then to start accepting USDC deposits on Ethereum scaling solutions Arbitrum<\/a> and Optimism<\/a>.<\/p>\n

As of this writing, Binance is the leading venue for trading USDC. Across several trading pairs, close to $380 million USDC has traded hands on the exchange over the past day, according to CoinGecko<\/a>.<\/p>\n

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Stablecoin issuer Circle argued that tokens pegged to the price of a sovereign currency, such as the U.S. dollar, are not securities, according to a court document filed Thursday. Weighing in on the Securities and Exchange Commission\u2019s (SEC) lawsuit against Binance, Circle outlined its stance on stablecoins\u2014without taking either party\u2019s side\u2014in an amicus brief filed […]<\/p>\n","protected":false},"author":2,"featured_media":165367,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-165366","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/165366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=165366"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/165366\/revisions"}],"predecessor-version":[{"id":165369,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/165366\/revisions\/165369"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/165367"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=165366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=165366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=165366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}