SEC declares 'covered' stablecoins like USDT and USDC are not securities, no registration needed for minting or redeeming
The U.S. Securities and Exchange Commission has taken a formal position on stablecoins, the popular cryptocurrency that tends to be pegged to the U.S. dollar and backed by real-world assets.
On Friday, the agency said in a statement that it does not consider "covered" U.S. dollar stablecoins to be securities and that those involved in the process of “minting” and redeeming stablecoins are not required to register the transactions with the commission.
The SEC issuing their position comes as stablecoin use and adoption appear poised to grow. Additionally, U.S. lawmakers are making headway in clarifying stablecoin regulation with new legislation. This week, the House Financial Services Committee voted to advance a bill to regulate stablecoins.
Dubbed STABLE, the bill would create a framework for dollar-denominated stablecoins. It also has reserve and capital requirements, including a one-to-one backing and anti-money laundering standards.
The SEC issuing added clarity regarding backed stablecoins could bolster lawmakers' efforts.
Backed stablecoins 'not' securities
"The offer and sale of covered stablecoins ... do not involve the offer and sale of securities," the SEC said on Friday.
According to the regulator, covered stablecoins maintain a stable value, are backed by reserves and are easily redeemable, much like the USD-pegged tokens offered by Tether and Circle, the world's two largest stablecoin issuers by supply.
Tether's USDT and Circle's USDC have a combined supply of over $200 billion, according to The Block Data Dashboard . Many expect that if traditional financial institutions like Bank of America begin minting stablecoins the overall supply will balloon into the trillions of dollars. "If they make that legal, we'll go into that business," Bank of America's CEO Brian Moynihan said in February .
The SEC also stated that those wishing to create or redeem covered stablecoins will be able to do so without notifying the SEC. "Persons involved in the process of 'minting' and redeeming covered Stablecoins do not need to register those transactions with the commission," it said.
Separately, in February, the SEC approved a yield-bearing stablecoin as a security.
