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 Poderskytė from DailyCoin
  • Binance has expressed concerns about stablecoin regulation in the U.S.
  • The development follows the exchange’s recent win in court against a regulator.
  • The exchange faulted “inconsistent approaches” to stablecoin oversight by different regulators.  

The world’s largest crypto exchange by trade volume, Binance, has raised concerns over what it termed “inconsistent approaches” to stablecoin regulation in the U.S.

On July 2, the crypto exchange responded to a District of Columbia court’s opinion discrediting several arguments of the Securities and Exchange Commission’s (SEC) “misguided crypto enforcement campaign.”

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

Binance’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 Binance’s efforts.

The court also found that the U.S. Department of Justice (DOJ) deemed another stablecoin “not a security,” contrary to the SEC’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 “much more difficult” to pass the Howey Test in transactions involving stablecoins.

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“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 further highlighted another challenge remaining despite the ruling being a “significant victory” for the exchange and the broader crypto industry.

SEC’s “Burden of Proof”

While the court dismissed the SEC’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 regulator’s claims to proceed.

This includes the SEC’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 SEC’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 Binance’s fine in India:
Binance Faces $2.25M Fine for Violating India’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, a Kenyan crypto reporter, is dedicated to delivering breaking news and updates from the cryptocurrency world. With a background as a Web3 writer and project manager, he recognizes the importance of unbiased reporting. Holding an LLB degree from the University of Nairobi, Brian's analytical skills contribute to his accurate news reporting. His personal interests include cooking, watching documentaries, reading, and engaging in intellectual discussions.