Circle, the firm responsible for the USDC stablecoin, is involved in a legal case with the U.S. Securities and Exchange Commission (SEC) against cryptocurrency exchange Binance. In this case, Circle is arguing that stablecoins, like USDC and Binance USD (BUSD), should not be considered securities.
Circle's argument, presented in a court filing, is centered on the idea that assets pegged to the U.S. dollar, such as stablecoins, don't qualify as securities because individuals who buy them don't expect to generate a profit from their purchase. Circle asserts that payment stablecoins lack "the characteristics of an investment contract."
The SEC initiated legal action against Binance on June 5, citing multiple regulatory violations. The agency has levied 13 charges against the cryptocurrency exchange, including allegations related to the sale of unregistered securities like BNB tokens and BUSD tokens. Additionally, the SEC claims that Binance operated as an illegal entity in the United States by failing to register as a broker-dealer clearing agency.
On September 22, Binance and its CEO, Changpeng Zhao, filed a motion to dismiss the SEC's lawsuit, contending that the agency exceeded its jurisdiction in this case. Binance and Zhao argue that the SEC failed to provide clear industry guidelines before initiating legal action against cryptocurrency exchanges and is imposing its authority retroactively.
The SEC has also taken a stance on non-fungible tokens (NFTs), claiming that they should be classified as securities. In August, the SEC filed charges against Impact Theory, an entertainment company, for selling NFTs without proper registration. Similarly, on September 13, the SEC brought charges against the company behind the Stoner Cats NFT series for facilitating the sale of unregistered securities through the creation of NFTs.
