Circle Files Amicus Brief in Binance-SEC Lawsuit, Supports Non-Security Status of Stablecoins

Stablecoin issuer Circle has taken a stance in the ongoing legal battle between the Securities and Exchange Commission (SEC) and major cryptocurrency exchange Binance. In a filing, Circle argued that stablecoins tied to other assets should not be subject to financial trading laws.

The SEC had previously charged Binance with multiple legal violations, alleging that the exchange facilitated trades in unregistered securities, including Solana’s SOL, Cardano’s ADA, and the Binance stablecoin BUSD.

The case has attracted significant attention within the crypto industry as major exchanges like Binance and Coinbase strive to challenge the application of heavy-handed U.S. financial regulations to cryptocurrencies. Circle has now joined the fray, contending that stablecoins tied to the U.S. dollar, such as BUSD and its own USDC, should not be classified as securities.

According to Circle’s amicus brief, payment stablecoins lack the essential features of an investment contract and therefore fall outside the jurisdiction of the SEC. They emphasize that decades of case law support the notion that the sale of an asset, without any post-sale promises or obligations, does not establish an investment contract.

The SEC had claimed that BUSD was marketed by Binance as an investment contract, as it allegedly offered yield through reward programs. In response, Binance, its U.S. arm, and its owner Changpeng “CZ” Zhao filed a motion to dismiss the SEC case, arguing that the regulator is attempting to assert authority over digital assets without proper authorization from Congress.

The outcome of this legal battle will likely have significant implications for the regulatory framework surrounding cryptocurrencies and stablecoins in the United States.