Stablecoins Deemed Non-Securities by SEC

SEC Clarifies Dollar-Backed Stablecoins Not Securities

• The SEC clarified that stablecoins backed one-to-one by the U.S. dollar are not considered securities under federal law.
• These stablecoins, termed “Covered Stablecoins,” are backed by low-risk, highly liquid reserves.
• They are intended for use as payment methods and value storage, not as investment products.
• The minting and redeeming processes of these stablecoins do not fall under the Securities Act or the Securities Exchange Act.
• The SEC used Reves and Howey tests to determine that these stablecoins are commercial instruments, not securities.

The SEC’s decision provides regulatory clarity for dollar-backed stablecoins, emphasizing their role as a medium of exchange rather than investment vehicles. This aligns with ongoing efforts to regulate digital assets comprehensively in the U.S.