Regulatory Clarity: SEC Publishes Updated Stablecoin Standards

The U.S. Securities and Exchange Commission (SEC) issued on Friday a landmark “Statement on Stablecoins,” officially establishing that reserved-backed “low-risk” digital assets that maintain a stable value relative to the U.S dollar (USD), what the Commission labels “covered stablecoins,” are not securities.

The statement specifically differentiates covered stablecoins from their more exotic algorithmic and yield-bearing counterparts and doesn’t apply to stablecoins that “track the value of reference assets other than USD.”

Interestingly, a disclaimer in the reference section of the document clarifies that the Division of Corporate Finance specifically issued the statement and does not represent the views of the SEC as a whole.

Stablecoins have notched several major wins both commercially and legally. The world’s largest stablecoin issuer Tether, realized $13 billion in profit in 2024. The U.S. House and Senate have each introduced a stablecoin bill, and the legislation stands a good chance of being enacted, given its bipartisan support. And now, the SEC (or technically speaking, one of its divisions) has issued a statement clarifying that vanilla stablecoins are not securities.

“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,” the statement reads.

“Accordingly, persons involved in the process of ‘minting’ (or creating) and redeeming Covered Stablecoins do not need to register those transactions with the Commission under the Securities Act.”

Tether’s USDT and Circle’s USDC dominate nearly 70% of the roughly $240 billion stablecoin market, according to data from Coinmarketcap. Both assets fit neatly into the SEC’s definition of covered stablecoins. It will be interesting to see how the regulator views popular non-covered stablecoins like Ethena’s yield-bearing USDe, which commands the third largest market capitalization after USDT and USDC.