The U.S. Securities and Exchange Commission (SEC) has released new guidance aimed at clarifying its stance on certain types of stablecoins and has created a new regulatory term: “Covered Stablecoins.”
According to a statement from the SEC’s Division of Corporate Finance, Covered Stablecoins are defined as the following digital assets:
- Maintaining a one-to-one peg to the US Dollar,
- It can be used one-to-one for US Dollars and
- Backed by low-risk, high-liquid reserve assets with a dollar value that meets or exceeds the total value of stablecoins in circulation.
The guidance explains that such stablecoins are not considered investment contracts and therefore do not fall under the SEC's jurisdiction as securities.
“Covered stablecoins do not include the offer and sale of securities,” the SEC stated, providing long-awaited clarity for issuers and market participants operating in the dollar-pegged stablecoin sector.
However, the Commission’s statement does not apply to algorithmic stablecoins, yielding stablecoins, or any digital asset pegged to non-USD values. Notably, the SEC has not issued a security determination on these other categories, leaving their regulatory status in limbo.
*This is not investment advice.
