Circle, a company that creates stablecoins, has stepped into the legal dispute between the Securities and Exchange Commission (SEC) and the big cryptocurrency exchange Binance. They are arguing that the rules governing financial trading should not apply to stablecoins that are linked to the value of other assets.
Back in June, the SEC accused Binance of breaking several laws by allowing the trading of cryptocurrencies like Solana’s SOL, Cardano’s ADA, and Binance’s own stablecoin BUSD. The SEC claimed that these activities were like trading unregistered securities.
Binance, as the world’s biggest crypto exchange, alongside competitors like Coinbase, is arguing that cryptocurrencies should not be subject to the existing strict financial regulations already in place in the United States.
Circle is arguing that cryptocurrencies like BUSD and their own USDC, which are pegged to the value of the US dollar, should not be considered as securities.
They claim this because when people buy these stablecoins, they aren’t expecting to make a profit on their investment. According to Circle, these stablecoins lack the key characteristics of an investment contract, and as a result, they shouldn’t be under the authority of the SEC.
They point to legal precedents that suggest that selling an asset without any promises or obligations for future returns doesn’t qualify as an investment contract.
