SEC's sword against BUSD, why Stablecoin is also recognized as a security?

23-02-13 14:05

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SEC Arrow points to BUSD, Why Stablecoin is also considered Security?

原文作者： Loopy Lu，Odaily星球日报

This morning, sources familiar with the matter said Stablecoin issuers Paxos Because BUSD The issue is subject to litigation by the Securities and Exchange Commission. nbsp; SEC Law enforcement officials have called Paxos A "Wells notice" is issued to inform of possible enforcement action. SEC Represents Paxos Offering and listing BUSD Is an unregistered security and plans to Sue. Paxos Violation of investor protection laws and possible enforcement action.

Wells Notice is an American company. SEC An informal reminder of a civil action against a listed company in the United States. The listed company receiving the notice may follow suit before receiving the formal action. SEC Communicate and negotiate. American SEC Former director of the Office of Internet Enforcement. John Reed Stark "In all my years at SEC Division of Enforcement 18 I do not recall a single time when I issued a Wells Notice and no enforcement action was taken. SEC encryption action continued."

Paxos A spokesman declined to comment. Didn't respond to a request for comment. Binance said in a statement, "BUSD is published and owned by &NBSP;Paxos it licenses its brand only. We will continue to monitor the situation."

As previously reported, the New York State Department of Financial Services (NYDFS) is investigating. Pax Dollar (USDP) and Binance USD (BUSD) StableCoin Issuer Paxos, the exact scope of the investigation is unclear. NYDFS The spokesman said the agency could not comment on an ongoing investigation.

And last for years. SEC The case against Ripple is different. This time, it is alleged that the Token and nbsp are considered securities. XRP Instead, its price does not cause a lot of volatility, but anchors the dollar. BUSD.

This has left the market wondering why Stablecoin is considered a security.

SEC Not yet matched. Paxos No documents have been disclosed, and the Odaily Planet has only consolidated information and made reasonable assumptions based on the available information.

Cryptocurrencies in the eyes of regulators VS. securities

When it comes to "Securities", it is natural to start with a clear concept. The Securities Act of 1933 It was the first federal law regulating the issuance and sale of securities in the United States. It was first enforced by the Federal Trade Commission, then by the Federal Trade Commission. SEC Established, this act also became. SEC The main law enforcement basis. The Act provides that, except for partial exemptions, any security must be paid to SEC Sign up.

In this law, the concept of securities is also clarified. The first paragraph of Article 2 of the Securities Law stipulates:

The term "securities" means any note, stock, Treasury stock, bond, debenture, debt obligation, certificate of interest or participation under a profit sharing agreement, letter of credit secured by securities, pre-formation certificate or subscription letter, transferable stock, investment contract, equity trust certificate, Certificates of deposit of securities, rights to deposit small amounts of interest in petroleum, gas or other minerals, or generally any interest and instrument generally considered to be "securities", or certificates of interest or participation in any of these securities, temporary or provisional certificates, receipts, certificates of security, or warrants or order or purchase rights.

It is clear that cryptocurrencies using emerging cryptotechnologies cannot be categorised as one of these products.

But there are many. SEC Legal disputes against crypto companies are still emerging.

This is because there is a flexible type of investment contract in the definition of securities, and many financial products that are not explicitly defined can be associated with this concept. Whether it can be defined as a security through this clause can be regarded as the famous "Howey test" as the criterion. In many existing judicial practices, SEC The Howe test is adopted as the standard for evaluating investment contracts in securities law.

Howe Test: SEC Punch encrypts the main weapon

In Florida in the last century, William Howey It was established. W. J. Howey Company Howey-in-the-Hills Service Company, and through these two companies to develop a novel product. W. J. Howey The company bought an orange orchard in Florida and subdivided the land to sell to investors. Investors, he promised, could lease the land to them. Howey-in-the-Hills Service, which operates and cares for the orchard, and the investor does not need to engage in any agricultural production to obtain the proceeds from the orchard.

SEC Eg. The investment contract is regarded as a security. Howey This particular land product was not directed to. SEC Filing of any registration statement in violation of securities laws.

1946 SEC Sue W. J. Howey The company. Finally, after a lengthy legal process, the United States Supreme Court ruled that land sales and service contracts qualify as "investment contracts" under the Securities Act, meaning they can be considered securities. This is an important case for determining the general applicability of the federal securities laws.

The case led to the creation of the Howe test, which determines whether certain investment products should be considered securities. SEC Holds that an "investment contract" is the investment of money in an ordinary enterprise with a reasonable expectation of profit from the efforts of others.

具体而言，豪威测试包含四项要素：

1. Investment funds;

2, in a common cause;

3. Reasonable expectation of profit;

4. It comes from the efforts of others.

And the Howe test applies to any contract, plan or transaction, whether or not it has the typical characteristics of a security.

It is for this reason that a large number of cryptocurrencies are involved in the "investment contract" category of securities, and SEC There was a lengthy legal dispute. In the long run SEC In Ripple v. SEC. On the basis of this principle. XRP Defined as a security.

SEC in July 2022; Will nbsp; AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, KROM Recognized as securities. (Note: PANews 2022 Year 7 Monthly data The Block Reported, the United States SEC Will "Coinbase insider trading" event, that is, 9 A cryptocurrency is listed as a security.)

2022 Year 11 Last month a federal court in New Hampshire ruled that the Howe test would be used. LBRY Identified as securities, in SEC V. nbsp; LBRY In a case that ruled in favor of the SEC. (LBRY, an encryption startup, sold "LBRY Credits" to raise money. 1100 $10,000, has not done an ICO, y 2021 Year 3 Lunar quilt SEC Accused it of being an unregistered broker-dealer.)

How does Stablecoin become a security?

However, with XRP And so on before being SEC The cryptocurrencies targeted are different. BUSD's stablescoins anchor the dollar to their price, and investors buy this "product" with no expected returns. How is a product defined as a security when it barely passes any of the Howe tests?

At present, SEC Not yet matched. Paxos Made an official move without disclosing any documents, Odaily Planet speculates:

To be clear, the Howe test is only used to determine the category of "investment contract" in securities law, and other more familiar financial securities such as bonds, notes, and certificates of mortgage trust are included.

Back to BUSD, Paxos 2023 Year 1 The reserve report released last month showed that The reserve consists of two product categories: US Treasuries and US Treasury reverse repurchase agreements (overnight maturity and excess collateral).

This position structure makes it more like a money market fund, which is to say, Is indirectly holding bonds (i.e., one of the classes of securities). We can speculate that it might be. SEC Will nbsp; BUSD Reasons for designation as securities.

Just, hold. BUSD Users of, say, a money-market fund-like product (BUSD) have not profited from it.

SEC The sanctions stick is waiting to be fired, but the impact has yet to be fed back into the market (BUSD is still anchored, BNB is solid in today's overall down market).

Nansen The data show that at present. BUSD Total market value 160 $100 million, ranking third on Stablecoin. Approximately 90% (144 Hundreds of millions of dollars. BUSD Held by Binamance address. Where the past 7 Net daily Binance outflow exceeding 8140 Ten thousand nbsp; BUSD. In addition, Jump Trading An address is in the past. 7 Net withdrawal from the trading platform within days. 5780 Ten thousand nbsp; BUSD, the address is still held 1880 Ten thousand nbsp; BUSD.