Regulation
Binance questions US regulatory approach to stablecoins
- Binance Expresses Concerns Over Stablecoin Regulation in the United States
- The development follows the exchange’s recent court victory against a regulator.
- The exchange denounced “inconsistent approaches” to the oversight of stablecoins by different regulators.
Largest in the world cryptocurrency exchange by volume of trade, Binanceexpressed concerns about what he called “inconsistent approaches” to regulating stablecoins in the United States
On July 2, the cryptocurrency exchange responded to a District of Columbia court opinion discrediting several arguments in the Securities and Exchange Commission’s (SEC) “misguided cryptocurrency enforcement campaign.”
Binance highlighted several critical findings from the court, including the rejection of the SEC’s claim that the exchange’s fiat-backed stablecoin, BUSD, is sold as an investment contract.
Binance’s Take on US Stablecoin Regulation
According to the manager blog postThe court found that BUSD was marketed as a stablecoin, with no facts suggesting that investors expected its value to appreciate due to Binance’s efforts.
The court also found that the U.S. Department of Justice (DOJ) had held that another stablecoin was “not a security,” contrary to the SEC’s argument when suing other stablecoin issuers.
Based on these findings, the court stressed the need for a consistent approach to managing these assets, noting that it could be “significantly more difficult” to pass the Howey test in transactions involving stablecoins.
“In our view, the fact that different U.S. agencies are taking inconsistent approaches to stablecoins creates deep market uncertainty and highlights a significant rule of law failure,” Binance wrote. “The court appropriately criticized the SEC’s decision to litigate the billion-dollar industry through a “case by case, coin by coin, court after court” approach.”
Binance also highlighted another challenge that remains despite the decision being a “significant victory” for the exchange and the broader crypto industry.
The SEC’s “Burden of Proof”
Although the court rejected the SEC’s arguments regarding the meaning of an investment contract and that the alleged sale of BNB on secondary crypto exchanges constituted securities transactions, it allowed some of the regulator’s claims to proceed.
This includes the SEC’s argument that direct sales of BNB are securities transactions. According to Binance, the court must presume that this assertion is true at this stage of the proceedings, which places the burden on the SEC to demonstrate that users acquired these tokens as investments rather than for other uses.
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