SEC: USDT and USDC Stablecoins Are Not Securities

On April 4, the regulator issued a statement that ”collateralized” stablecoins pegged to the U.S. dollar are not considered securities. This means that companies issuing and redeeming such assets may not have to register those transactions with the financial regulator.

What are ”secured” stablecoins?

As defined by the SEC, ”secured” stablecoins are cryptocurrency assets that:

• maintain a stable value
• backed by real reserves
• easily redeemable

The tokens issued by the two largest issuers of stablecoins, Tether (USDT) and Circle (USDC), fall into just such a category. Their combined market supply exceeds $200 billion.

Why it matters

The regulator's announcement comes at a time when the use of stablecoins is ready to reach a new level. Traditional financial institutions are increasingly interested in this market segment. For example, Bank of America CEO Brian Moynihan stated back in February, ”If they make stackablecoins legal, we will get into the business.”

Many experts believe that if giants like Bank of America start issuing their own stablecoins, the total supply could grow to trillions of dollars.

Legislative support

In parallel to the SEC's announcement, U.S. lawmakers are pushing forward new legislation to regulate stablecoins. This week, the House Financial Services Committee voted to advance a related bill called STABLE.

This document proposes to create a regulatory framework for U.S. dollar-denominated stablecoins. It also includes reserve and capital requirements, including 100 percent collateralization and anti-money laundering standards.

The clarity provided by the SEC on secured stablecoins could strengthen legislative initiatives and create a more favorable environment for the development of this segment of the cryptocurrency market.