The US Securities and Exchange Commission (SEC) has asserted that it does not consider covered stablecoins to be securities.
In an announcement on Friday, the SEC’s Division of Corporation Finance stated that generally stablecoins do not fall under the definition of a security. The Division specifically referred to covered stablecoins, describing them as crypto assets designed and marketed for purposes such as making payments, transferring funds, or storing value.
The statement read: “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 or Section 3(a)(10) of the Securities Exchange Act of 1934.”
Following this clarification, participants involved in minting or redeeming covered stablecoins are not required to register these transactions with the SEC under the Securities Act, nor must they depend on any of its exemptions.
One of the main reasons for the SEC’s position is that stablecoins are often pegged to a fiat currency, which helps maintain a stable value, unlike other digital assets.
This stability that comes with the confirmation has also attracted interest from traditional banks. Earlier this year, Bank of America announced plans to use stablecoins once further legislation is in place.
The bank may not have to wait long, as President Donald Trump is pushing to fast-track the Genius Act through the country’s legislative process. The bill sets out clear guidelines for stablecoin issuers, including a requirement that only state-regulated entities can issue stablecoins. It also includes rules covering anti-money laundering and other consumer protection measures.
However, there are critics of the proposed legislation. Senator Elizabeth Warren argued that it fails to provide sufficient consumer safeguards, neglecting protections that “apply to every other financial product available in America.”
