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To protect stablecoins from regulatory frameworks as applied to traditional securities, Circle (CRYPTO: USDC) stepped into the legal case of Binance (CRYPTO: BUSD) and the SEC.
What Happened: Circle entered an ongoing legal dispute between the SEC and cryptocurrency exchange Binance with an argument that stablecoins should not face the same financial trading regulations as traditional securities, as reported by the Metaverse Post. This is mainly due to users not expecting any profit from their unique stablecoin purchases.
Circle added that assets were tied to the dollar, such as BUSD and its own issued coin, USDC.
Circle’s filing was made partially by its Chief Legal Officer Heath Tarbert, who was also the former chair of the Commodity Futures Trading Commission. The filing is known as amicus curiae or friend of the court brief.
Read Now: Circle Turns To Cash Reserves To Battle PayPal And Tether For Stablecoin Supremacy
Why It Matters: Circle stated that per the law, any asset sale disconnected from any post-sale obligations by the seller was not enough to establish an investment contract and hence SEC’s claim stood false.
In a late August post by Coinbase Global Inc (NASDAQ:COIN) CEO Brian Armstrong and Circle CEO Jeremy Allaire, the two stated, “The growing regulatory clarity surrounding stablecoins in the U.S. and globally makes a separate governance body like Centre no longer necessary.”
SEC-Binance Case Background: The case originally involved arguments from crypto exchanges such as Binance and Coinbase which said cryptocurrencies should not be subject to existing strict U.S. financial laws.
In June, Binance faced several charges from regulators due to legal violations by the exchange in conducting trades on alleged cryptocurrencies such as Polygon (CRYPTO: MATIC), Binance Coin (CRYPTO: BNB), Solana (CRYPTO: SOL), Cardano (CRYPTO: ADA) and the Binance stablecoin, BUSD.
SEC also accused Binance of selling BUSD as an investment contract because it was promoted with yield offerings through reward programs.
Binance along with its U.S. arm (Binance.US) and owner Changpeng “CZ” Zhao filed a motion to dismiss the case and argued the regulator was trying to control the digital assets without proper authorization from Congress.
Also Read: Coinbase Acquires Equity Stake In Circle: A New Era For USDC
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