April 9, 2025
By Our Correspondent
The U.S. Securities and Exchange Commission (SEC) released a statement last week regarding stablecoins, clarifying that certain ‘covered’ stablecoins will not be classified as securities.
This primarily pertains to specific fiat-backed stablecoins that do not offer any yield or interest to their holders. For stablecoins that do not meet the criteria to be considered covered, the SEC refrains from labeling them as securities, opting instead to withhold any opinion on their status. This category includes non-USD stablecoins, commodity-linked stablecoins, and algorithmic stablecoins.
It appears that Tether would not be categorized as a ‘covered’ stablecoin. This conclusion arises from the SEC’s stipulation that reserves for USD stablecoins must be maintained in “low-risk and readily liquid” assets, explicitly excluding precious metals and other cryptocurrencies.
Approximately 9% of Tether’s reserves consist of metals and cryptocurrencies, and at least another 8% of its reserves likely do not meet the criteria of being low risk and readily liquid.
Some may contend that the SEC’s announcement is unnecessary, considering that stablecoin legislation is on the horizon. However, the exact timeline remains uncertain, and developments continue to unfold. This statement alleviates some of the legal ambiguity surrounding Circle’s IPO, even as other companies withdraw their stock market listings in response to recent market volatility linked to tariffs.
Additionally, the announcement may enable the SEC to avoid addressing inquiries regarding the new USD1 stablecoin introduced by World Liberty Financial, which is under the control of the Trump family.
The recent statement regarding stablecoins represents another initiative by the new SEC leadership aimed at enhancing transparency within the digital assets sector. On Friday evening, Acting Chair Mark Uyeda shared on X additional areas that the SEC intends to reassess.
These areas encompass guidance notes related to the classification of cryptocurrencies as investment contracts, the role of qualified custodians, and the involvement of funds in Bitcoin futures markets.
To date, the SEC has revoked SAB 121, which restricted banks from offering digital asset custody services, and has provided guidance concerning meme coins and cryptocurrency mining. Moreover, it has established a crypto task force, conducted the first of several crypto roundtables, and withdrawn from multiple legal proceedings.
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