In the ongoing legal battle between the Securities and Exchange Commission (SEC) and Binance, stablecoin issuer Circle has contended that regulatory frameworks for financial trading should not extend to stablecoins.
Circle, led by its Chief Legal Officer Heath Tarbert, a former chair of the Commodity Futures Trading Commission, filed an amicus curiae brief in the case.
Circle, in a court filing on Thursday, challenged the SEC’s allegations against Binance stablecoin BUSD it was sold as an investment contract because Binance marketed it as providing yield through reward programs.
In response, Binance, its U.S. arm, and its owner Changpeng “CZ” Zhao filed for the dismissal of the SEC case, arguing that the regulator is attempting to assert authority over digital assets without congressional authorization.
Circle’s argument focuses on stablecoins tied to the U.S. dollar, such as BUSD and its own USDC, asserting that they should not be considered securities. One key point raised is that users of these stablecoins do not anticipate profits from standalone purchases.
According to Circle’s filing, “Payment stablecoins, on their own, do not have the essential features of an investment contract.”
The filing further contends that an asset sale, disconnected from any post-sale promises or obligations by the seller, does not establish an investment contract, as supported by decades of case law.