Binance Questions U.S. Stablecoin Regulation Approach

Binance addresses its recent win in court against the SEC and raises concerns about stablecoin regulation in the U.S.

Man looking down the cliff, seeing a meteor shower of BNB tokens, shooting into the ground.
Created by Kornelija Poderskytฤ— from DailyCoin
  • Binance has expressed concerns about stablecoin regulation in the U.S.
  • The development follows the exchangeโ€™s recent win in court against a regulator.
  • The exchange faulted โ€œinconsistent approachesโ€ to stablecoin oversight by different regulators.  

The worldโ€™s largest crypto exchange by trade volume, Binance, has raised concerns over what it termed โ€œinconsistent approachesโ€ to stablecoin regulation in the U.S.

On July 2, the crypto exchange responded to a District of Columbia courtโ€™s opinion discrediting several arguments of the Securities and Exchange Commissionโ€™s (SEC) โ€œmisguided crypto enforcement campaign.โ€

Sponsored

Binance pointed out multiple critical findings by the court, including the dismissal of the SECโ€™s claim that the exchangeโ€™s fiat-backed stablecoin, BUSD, is sold as an investment contract.

Binanceโ€™s View on U.S. Stablecoin Regulation

According to the official blog post, the court established that BUSD was marketed as a stablecoin, with no facts suggesting that investors expected its value to appreciate due to Binanceโ€™s efforts.

The court also found that the U.S. Department of Justice (DOJ) deemed another stablecoin โ€œnot a security,โ€ contrary to the SECโ€™s argument when pursuing other stablecoin issuers.

Based on these findings, the court underscored the need for a consistent approach to dealing with these assets, noting that it might be โ€œmuch more difficultโ€ to pass the Howey Test in transactions involving stablecoins.

โ€œIn 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,โ€ Binance wrote. โ€œThe court appropriately criticized the SECโ€™s decision to litigate the billion-dollar industry through a โ€œcase by case, coin by coin, court after courtโ€ approach.โ€

Binance further highlighted another challenge remaining despite the ruling being a โ€œsignificant victoryโ€ for the exchange and the broader crypto industry.

SECโ€™s โ€œBurden of Proofโ€

While the court dismissed the SECโ€™s arguments regarding the meaning of an investment contract and the alleged sale of BNB on secondary crypto exchanges constituted securities transactions, it allowed some of the regulatorโ€™s claims to proceed.

This includes the SECโ€™s argument that direct sales of BNB are securities transactions. Per Binance the court must assume this claim to be true at this stage of the proceedings, making it the SECโ€™s onus to demonstrate that users acquired these tokens as investments rather than for other uses.

Read how Binance is cracking down on users selling their accounts:
Binance Users Are Selling Accounts, Exchange Is Cracking Down

Stay updated on Binanceโ€™s fine in India:
Binance Faces $2.25M Fine for Violating Indiaโ€™s AML Laws

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Brian Danga

Brian Danga is a crypto reporter at DailyCoin covering breaking news. Brian has minor holdings in Bitcoin and Ethereum.

Read more