The U.S. Securities and Exchange Commission (SEC) has unveiled new guidance regarding stablecoins, highlighting its commitment to enhancing regulatory clarity in the cryptocurrency sector.
The SEC announced that this guidance aligns with its mission to elucidate federal securities laws as they pertain to crypto assets. The agency is specifically focusing on a category of stablecoins referred to as “Covered Stablecoins.”
According to the SEC, “Covered Stablecoins” are defined as stablecoins that maintain a stable value against the U.S. dollar on a 1:1 basis, which are also redeemable for USD on the same ratio.
These USD-pegged stablecoins are characterized by low-risk, highly liquid assets backing their reserves. The assets supporting these stablecoins are required to have a value that meets or exceeds the total redemption value of all coins currently in circulation.
Importantly, the SEC’s statement differentiates these stablecoins from other varieties, such as algorithmic and yield-bearing stablecoins, and it does not apply to stablecoins pegged to assets other than the U.S. Dollar.
The two predominant USD-pegged stablecoins currently are Tether (USDT) and USD Coin (USDC).
With this guidance in place, the SEC clarifies that the sale or offering of “Covered Stablecoins” does not meet the criteria for an investment contract.
“It is the Division’s view that the offer and sale of Covered Stablecoins, in the manner and under the circumstances described in this statement, do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933,” stated the division.
The statement aims to clarify essential considerations and implications for issuers of these stablecoins now deemed outside the SEC’s regulatory oversight.
Key highlights from the statement indicate that issuers must utilize proceeds from sales to fund reserves for the Covered Stablecoins, while purchasers are not expected to earn returns on their holdings. Furthermore, Covered Stablecoins do not promote speculative trading or investments.
“Accordingly, persons involved in the process of ‘minting’ and redeeming Covered Stablecoins are not required to register these transactions with the Commission under the Securities Act or seek an exemption from registration,” the agency noted.
