The issuer of the stablecoin USDC is refuting the US Securities and Exchange Commission’s (SEC) blanket claim that most crypto assets are securities.
Court documents show that Circle has filed a claim amicus curiae brief in the SEC’s case against crypto titan Binance.
In the letter, Circle says the SEC does not have the authority to regulate stablecoins – crypto assets used to make payments and settlements that are pegged 1:1 to the US dollar.
The company emphasizes that thThese assets do not have the essential features of an investment contract, a type of security overseen by the SEC.
“They do not independently give buyers any profit potential, and certainly not based on the efforts of the stablecoin issuer. As a result, the SEC has no jurisdiction over such stablecoins because there are no additional factors that turn the sale of the stablecoin into an investment contract.
The sale of payment stablecoins, without more, is just the sale of assets. Decades of case law support the view that a sale of assets – divorced from any post-sale promises or obligations by the seller – is not sufficient to create an investment contract.”
Circle says it filed the brief with the aim of shedding light on the nature of stablecoins. The SEC’s complaint alleges that the Changpeng Zhao exchange engaged in the illegal offering and sale of an investment contract when it failed to register the Binance USD (BUSD) stablecoin with the securities watchdog.
“The SEC’s allegation that Binance offered and sold its competing stablecoin as an unregistered security raises serious legal questions that impact the digital currency and the U.S. economy more broadly. Circle therefore files this brief pursuant to Local Rule 7(o), not to support either party, but to assist the Court in understanding stablecoins and their status under the federal securities laws.”
While Circle says that stablecoins for payments should be outside the purview of the SEC, the company notes that dollar-pegged crypto assets should still be subject to a “sound regulatory regime that protects both consumers and financial stability in the US.” ”
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