SEC Rules That ‘Covered’ Stablecoins Are Not Securities
The Securities and Exchange Commission (SEC) says that stablecoins, generally speaking, are not securities.
That’s according to a statement from the regulator’s Division of Corporate Finance issued Friday (April 4), which means that these coins do not need to be registered with the commission. The statement says this determination applies to what it calls “covered stablecoins.”
“Covered stablecoins are crypto assets designed and marketed for use as a means of making payments, transmitting money, or storing value,” the statement said.
“They are designed to maintain a stable value relative to USD and are backed by USD and/or other assets that are considered low-risk and readily liquid so as to allow a covered stablecoin issuer to honor redemptions on demand.”
The corporate finance division added that it’s view is “not dispositive” of whether any stablecoin is offered or sold as a security.
“A definitive determination requires analyzing the facts relating to the specific stablecoin and the circumstances surrounding its offer and sale,” the statement added. “Where facts vary from those presented in this statement, the Division’s view as to whether the specific stablecoin is offered or sold as a security may be different.”
The determination comes amid attempts to pass stablecoin legislation, with both the House and Senate recently taking up bills addressing the currencies.
For example, the House Financial Services Committee last week advanced the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act to the full House for consideration.
“Members in this room — on both sides of the aisle — have spent years collaborating on stablecoin legislation,” said Rep. French Hill, the Arkansas Republican who chairs the committee.
“We’ve all come to an important conclusion: Innovation needs guardrails, not roadblocks. The STABLE Act is just that.”
However, Democrats on the committee said that the bill does away with the consumer protections established in earlier, bipartisan legislation.
“It lacks proper regulation, oversight, and accountability for entities that harm consumers,” the committee’s Democrats said in a statement last week. “Not to mention, in this bill, the Federal Reserve has no authority over state regulated digital wallets that consumers use to hold their stablecoins, leaving American consumers who use those wallets vulnerable.”
Meanwhile, the Senate’s stablecoin bill, the GENIUS Act, is reportedly on a “fast track” after being advanced by an 18-6 vote with bipartisan support in the Senate Banking Committee. This bill is said to be a priority of President Donald Trump.
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