SEC Declares Certain USD-Pegged Stablecoins Are Not Securities

The U.S. Securities and Exchange Commission (SEC) has issued new guidance aimed at bringing more clarity to the regulatory treatment of stablecoins.

In a statement from the Division of Corporation Finance, the agency introduced the term “covered stablecoins” to describe a specific type of stablecoin that is pegged 1:1 to the U.S. dollar and fully redeemable at that rate.

These covered stablecoins must be backed by low-risk, highly liquid assets, with reserves that meet or exceed the total value of all tokens in circulation. The SEC clarified that this guidance applies strictly to USD-pegged stablecoins and does not extend to algorithmic, yield-bearing, or non-USD-backed stablecoins.

Tether (USDT) and USDC are the two most prominent examples of stablecoins pegged to the dollar. Under the new definition, the SEC has stated that the issuance and sale of covered stablecoins, as described in the statement, do not qualify as securities under Section 2(a)(1) of the Securities Act of 1933. This means these tokens are not subject to the same regulatory requirements as investment contracts.

The SEC emphasized that this determination is based on specific conditions: the funds raised from stablecoin sales are used exclusively to back the reserves, holders do not expect a return on their funds, and the tokens are not intended for speculative investment. As such, minting and redeeming Covered Stablecoins does not require SEC registration or fall under any securities exemptions.

This move signals a step toward clearer regulatory pathways for stablecoin issuers and sets a precedent that could shape future legislation in the crypto space.

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