SEC Clarifies Legal Status of Stablecoins

The Corporate Finance Division of the U.S. Securities and Exchange Commission (SEC) outlined the characteristics of stablecoins that are not classified as securities.

Crypto assets “designed and sold for use as a means of payment, money transfer, or value storage,” but not for investment purposes, are not considered securities.

“The Division believes that the offer and sale of [the mentioned] stablecoins in the manner and under the circumstances described in this statement do not constitute an offer and sale of securities,” the document states.

According to the statement, such stablecoins are “designed to maintain a stable value relative to the U.S. dollar and are backed by U.S. dollars and/or other assets considered low-risk and liquid.”

Funds must be held in reserve and meet or exceed the value of stablecoins in circulation. The issuer is obliged to issue and redeem the asset on demand in unlimited quantities.

Secondary market trading and intermediary participation in transactions are permitted, but stablecoins must not grant holders rights to any form of dividends or shares in the issuing company or another business.

The use of crypto assets and precious metals as backing is not allowed, which may pose a barrier for Tether’s USDT in the U.S. market. However, according to the company’s head, Paolo Ardoino, the restriction will not be an issue—if necessary, the firm will issue a new asset specifically for the U.S. market.

Earlier, the SEC excluded any connection between mining using the Proof-of-Work consensus algorithm and securities.