2025-04-07
April 4, 2025 - The U.S. Securities and
Exchange Commission (SEC) has clarified that certain U.S. dollar-backed
stablecoins, like USDT and USDC, are not considered securities, removing a key
regulatory hurdle for the fast-growing sector.
In new guidelines issued Friday, the
SEC introduced the term “covered stablecoins” — tokens backed 1:1 by
U.S. dollars or high-liquidity, short-term assets held in regulated financial
institutions.
These stablecoins are exempt from
transaction reporting and registration requirements under securities law, a
move that provides long-sought clarity for issuers and investors alike.
“The offer and sale of covered
stablecoins do not involve the offer and sale of securities,” the SEC stated.
Covered stablecoins must be fully
redeemable in dollars and cannot offer interest or yield to holders. Issuers
are also barred from using reserve funds for investments or mixing them with
operating capital — conditions that effectively rule out yield-bearing or
algorithmic stablecoins from this exemption.
Algorithmic, Synthetic Stablecoins
Still in Limbo
The guidance leaves other forms of
digital dollar equivalents — such as algorithmic stablecoins and synthetic
dollars, outside the regulatory safe zone. These remain under scrutiny and
subject to further regulatory decisions.
The SEC’s stance lines up with broader
policy moves to strengthen the dollar’s role in global finance.
Lawmakers are currently advancing bills
like the GENIUS Stablecoin Act and the Stable Act of 2025, which similarly call
for fully backed, dollar-denominated stablecoins with strict reserve
requirements.
Treasury Secretary Scott Bessent,
speaking at the White House Digital Asset Summit last month, said regulating
stablecoins is central to the administration’s digital asset strategy. He
emphasized that “stablecoins will be used to extend U.S. dollar dominance.”
Tether, the world’s largest stablecoin
issuer, now holds more U.S. Treasuries than several countries, underscoring the
growing role of stablecoins in global demand for U.S. debt.
No SEC Registration Required for
Minting or Redeeming
In a major relief for issuers like
Tether (USDT) and Circle (USDC), the SEC confirmed that minting and redeeming
covered stablecoins does not require registration.
This exemption is expected to pave the
way for wider adoption and institutional involvement, including from banks.
Earlier this year, Bank of America CEO
Brian Moynihan hinted at entering the stablecoin business if regulations allow.
With today’s announcement, that door may now be open.
In February, the SEC approved a yield-bearing stablecoin as a security.
Despite the clarity, many in the
industry are pushing for legal changes that would allow stablecoin issuers to
share yield or offer interest, something not permitted under the current
guidelines.
The House Financial Services Committee
is now advancing legislation that may address this, potentially opening the
door to yield-bearing stablecoins under a separate regulatory framework.
For now, though, the SEC’s latest move leads
to clear federal recognition that some stablecoins are outside the scope of
securities law, a long-awaited win for the crypto industry.
