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HomeFinance NewsCircle Challenges Binance's SEC Case, Defending BUSD and USDC as Non-Securities.

Circle Challenges Binance’s SEC Case, Defending BUSD and USDC as Non-Securities.

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Stablecoin issuer Circle has become involved in the Securities and Exchange Commission’s (SEC) case against cryptocurrency exchange Binance. The company argues that financial trading laws should not be applied to stablecoins that are pegged to other assets. Binance was charged by regulators in June for facilitating trades in various cryptocurrencies, including solana’s SOL, cardano’s ADA, and the Binance stablecoin BUSD, which the SEC deemed to be unregistered securities. This case is significant as major crypto exchanges, such as Binance and Coinbase, are striving to prove that cryptocurrencies should not be subject to existing stringent US financial regulations.

Circle’s argument is based on the belief that payment stablecoins like BUSD and its own USDC do not possess the fundamental characteristics of an investment contract, making them exempt from SEC jurisdiction. According to Circle’s filing, the absence of post-sale promises or obligations by the seller, combined with the lack of profit expectation from standalone purchases, supports this viewpoint. The SEC asserted that BUSD was marketed as an investment contract due to reward programs. Binance, along with its US branch and its owner Changpeng “CZ” Zhao, recently filed a motion to dismiss the SEC case, claiming that the regulator is seeking authority over digital assets without explicit authorization from Congress.

Circle’s Chief Legal Officer, Heath Tarbert, who previously chaired the Commodity Futures Trading Commission (CFTC), has contributed to the filing. The CFTC itself is suing Binance for regulatory violations. Circle’s involvement in the case takes the form of an amicus curiae or friend of the court brief, adding another perspective to the ongoing legal dispute.

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