tl;dr
The US Securities and Exchange Commission (SEC) has issued a definitive statement on the regulatory treatment of stablecoins, clarifying that certain stablecoins, under specific conditions, do not fall under the definition of securities. These "covered stablecoins" must meet strict requirements, inc...
The US Securities and Exchange Commission (SEC) has issued a definitive statement on the regulatory treatment of stablecoins, clarifying that certain stablecoins, under specific conditions, do not fall under the definition of securities. These "covered stablecoins" must meet strict requirements, including maintaining a one-to-one peg with the US dollar and being backed by highly liquid, low-risk assets.
The SEC's guidance could reshape the market but casts doubt on whether Tether's USDT qualifies. Tether is considering launching a new stablecoin fully backed by cash and US Treasuries to align with US regulations.
Industry responses to the new guidelines have been mixed, with some welcoming the move for providing clarity, while others criticize it for downplaying risks in the stablecoin market.
The SEC labeled these assets as "covered stablecoins," and they must meet strict requirements to remain outside the regulator’s oversight. These stablecoins are not marketed as investments, but rather as a stable, quick, reliable, and accessible means of transferring value, or storing value and not for potential profit or as investments.
According to the statement, a covered stablecoin must maintain a one-to-one peg with the US dollar and be backed by highly liquid, low-risk assets. It must also be redeemable on demand at full value. Importantly, these tokens cannot offer profit, interest, governance rights, or ownership stakes. Their sole function must be payment, money transfer, or value storage.
The SEC explained that these assets are not investment vehicles but are typically marketed as "digital dollars." As such, the agency does not consider its offer or sale to involve securities under federal law.
This marks a rare moment of clarity from the SEC, which has often taken an ambiguous or enforcement-first approach to crypto regulation. However, while the SEC’s guidance clearly provides a path forward for stablecoins like USDC, it casts doubt on whether Tether’s USDT qualifies. Tether’s USDT’s reserves include Bitcoin and gold, which are explicitly disqualified by the SEC’s criteria.
Meanwhile, Forbes journalist Nina Bambysheva reported that Tether is considering launching a new stablecoin fully backed by cash and US Treasuries to align with US regulations.
The news comes as stablecoins are gaining wider adoption despite market volatility. Daily usage continues to climb even during a challenging first quarter for digital assets. Data from IntoTheblock shows that the sector increased by more than $30 billion during the first quarter of the year despite the broader market sell-off.
Nevertheless, industry responses to the new guidelines have been mixed. David Sacks, a White House advisor on crypto policy, welcomed the move. Sacks said the statement provides long-overdue clarity and could ease regulatory burdens for compliant issuers. However, SEC Commissioner Caroline Crenshaw offered sharp criticism. She warned that the guidance downplays risks in the stablecoin market and misrepresents key legal issues.