SEC Says Binance BUSD Should Be Classified as a Security

WASHINGTON – The United States Securities and Exchange Commission (SEC) has taken a strong stance on the classification of Binance’s stablecoin, BUSD, and related investment services. Relying on a U.S. Supreme Court ruling and the Howey test – a benchmark for determining what constitutes a security – the SEC says BUSD and related offerings such as BNB Vault and Simple Earn meet the securities criteria.

The SEC’s position is further strengthened by a recent New York court ruling against Terraform Labs. This precedent, which classified digital assets such as UST and LUNA as securities, serves as a cornerstone of the SEC’s argument. By drawing parallels between Binance’s services and those involved in Terraform’s ruling, the SEC aims to establish a regulatory framework for BUSD and its yield programs under the same set of rules that govern traditional securities.

The Howey test, a crucial benchmark in the SEC’s argument, traditionally evaluates investment contracts based on the expectation of profits from the efforts of others. This legal standard, along with the Supreme Court’s decision, provides the SEC with a fundamental basis for asserting that Binance’s products should not be exempt from securities regulations.