Circle Internet Financial Ltd., a cryptocurrency financial services company, has entered the legal fray of tech giant Binance’s case with the United States Securities and Exchange Commission (SEC). According to a court filing Tuesday, 26th October 2021, Circle weighed in on the case with an amicus curiae (or “friend of the court”) brief, arguing that the company’s various stablecoin products should not be classified as securities.
1. Circle Petitions U.S. SEC in Binance Case
Circle has made a move in the ongoing legal battle between Binance and the United States Securities and Exchange Commission (SEC) by filing a petition in the U.S. Court of Appeals for the District of Columbia Circuit.
The petition, submitted this week, seeks to intervene in a case in which the SEC sued Binance, the world’s largest crypto exchange, alleging securities law violations. Circle seeks to support Binance, stating that the case involves issues “of great public importance and of great consequence to interested persons in the United States and worldwide, in particular, to the digital asset industry.”
The petition further revealed that Circle’s involvement has recently increased in the world of digital assets and that they have become a regulated payments company with expertise in dealing with virtual currencies, particularly those backed by the US dollar. Circle asserts that their “unique experience and understanding of the technology, the markets, the economics, and the law” will be of paramount importance to the case.
- Circle filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit
- Petition seeks to intervene in SEC-Binance case
- Circle’s expertise in digital assets will be of importance to the case
2. Circle Contends Stablecoins Should Not Be Deemed Securities
Circle Seeks Regulatory Clarity
Cryptocurrency startup Circle has sought to provide clarity on the regulation of digital tokens as stablecoins. The company has gone on record to state that stablecoins should not, under any circumstances, be deemed securities. Circle has thus appealed to regulators for clarity to end the associated ambiguity.
In an open letter addressed to the Securities and Exchange Commission, Circle argued that stablecoins in their present form are “bearer instruments” and therefore do not require registration as securities under the SEC’s jurisdiction. Circle CEO Jeremy Allaire went on to claim that stablecoins should instead be viewed as digital assets overseen by the Commodity Futures Trading Commission.
Further the letter referenced how Circle has already been able to establish itself as a “formal banking partner” for some of the most advanced stablecoins in the market today. The company even took the effort to support their stance by citing legal precedent in the form of a prior court ruling. Circle is hopeful that regulators will take note of this and deliver a timely resolution to the issue in terms of clarity on the legal mechanisms involved.
3. Circle Draws Support from Industry Peers in Petition
Circle’s petition calling for the legal recognition of stablecoins – a new class of digital assets - has gathered support from major players in the industry.
The petition, addressed to the United States financial regulators, was signed by 22 organisations, including Fidelity Investments, Visa, Stripe, and ARK Invest. The signees join a collective of other crypto-focused firms and blockchain advocacy groups from which Circle had already received pledges of their backing.
- The petition seeks to accelerate the development of rules and regulations that would support the launch and implementation of various digital currencies.
- Along with the aforementioned companies, Alvin Liu of ARK Invest, Jean-Philippe Narmino of Visa, and Devin Singh of Fidelity have expressed their support.
- If the petition succeeds, it could lead to improved confidence in the cryptocurrency space, rapid industry expansion and the emergence of even more powerful crypto networks.
Circle’s move to enter the Binance case is the latest development in the debate over whether stablecoins should be classified as securities or not. With crypto giants drawing lines in the sand, it’s clear that the industry is taking the SEC’s stance seriously. Hopefully the court will be able to reach a sensible decision, but with the high stakes, it looks like the battle is only just beginning.