In a significant move, the U.S. Securities and Exchange Commission (SEC) has clarified that fully-reserved, liquid, dollar-backed stablecoins are not classified as securities. This decision means that blockchain transactions related to minting or redeeming these stablecoins are exempt from registration requirements under the Securities Act. The SEC’s stance offers much-needed regulatory clarity for stablecoin issuers and users, distinguishing these digital assets from investment vehicles.
The SEC defines these exempt stablecoins as “Covered Stablecoins,” which must be fully backed by high-quality, liquid assets such as cash or short-term Treasury bills and maintain a one-to-one peg with the U.S. dollar. They are designed for payments, money transfers, and value storage, rather than as investment products. This categorization excludes algorithmic stablecoins and those offering yield or interest, leaving their regulatory status uncertain.
Industry leaders welcome this clarity, though some advocate for further changes to allow stablecoin holders to earn interest. The move aligns with broader U.S. policy objectives to maintain the dollar’s global reserve status through stablecoins backed by U.S. dollars and government securities.
