Stablecoins pegged to the US dollar, according to the SEC, generally do not qualify as securities.
The U.S. Securities and Exchange Commission (SEC) is mixing things up when it comes to stablecoins, especially those that dance with the U.S. greenback. In a swift press release, the agency has declared that digital dollars pegged to the buck and not dishing out yields don't find themselves under its supervision.
The SEC reckons that these stablecoins are hot property for making purchases, shifting funds, or stashing coin without expectations of profit. That's a stark contrast to typical securities. As they ain't investment vehicles, the SEC ain't meddling.
The agency's statement reads: “Covered stablecoins are marketed solely for use in commerce, as a means of making payments, transmitting money, and/or storing value, and not as investments.”
This new guidance swerves from the SEC's former tenure under Gary Gensler, who steered the ship during the Biden Administration. Gensler's regime slapped legal handcuffs on numerous crypto businesses, like Ripple Labs, Coinbase, Kraken, and Consensys. However, many of these court cases are slipping through the through the cracks or about to bite the dust. This dude also classified most digital tokens as securities, except Bitcoin.
Approval for Bitcoin ETFs escaped Gensler's*** eyes, causing frustration in crypto circles due to perceived regulatory overreach. Gensler vacated his position in January. Since then, Mark Uyeda has been acting the chairman. The SEC is gearing up for a fresh face at the helm.
Enter Paul Atkins, a former SEC commissioner who favors less regulation. The Senate Banking Committee just moved his nomination forward with a 13-11 vote. Atkins has past connections to the crypto universe, clout that could influence future SEC policies.
Fun Facts:
- Stablecoin Breakdown: The SEC's new stance primarily concerns stablecoins pegged to traditional fiat currencies (excluding metals or other cryptocurrencies), which maintain a one-to-one redeemable ratio for their dollar value. However, this guidance doesn't apply uniformly to all stablecoins, such as Tether (USDT), due to variations in reserve composition and redemption terms.
- ** Austere Future:** This guidance isn't enshrined in law and could potentially waver in the face of future legislation. To illustrate, the STABLE Act and the GENIUS Act aspire to assign regulatory authority to banking regulators, possibly overriding these guidelines.
This newly found clarity won't apply across the board to all stablecoins, not even stablecoins like Tether due to their nuanced reserve compositions and redemption constraints. Furthermore, the Commodity Futures Trading Commission (CFTC) is already patrolling stablecoin territories, enforcing anti-fraud regulations. This is a whole Wild West thing. Yee-haw!
- The U.S. Securities and Exchange Commission (SEC) has stated that stablecoins marketed solely for use in commerce, as means of making payments, transmitting money, and/or storing value, and not as investments, fall outside its supervision.
- Mark Uyeda, the current acting chairman of the SEC, is gearing up for a fresh face at the helm, with the Senate Banking Committee having moved forward the nomination of former SEC commissioner Paul Atkins, who has past connections to the crypto universe and favors less regulation.
- The SEC's new stance on stablecoins primarily concerns stablecoins pegged to traditional fiat currencies, but this guidance doesn't apply uniformly to all stablecoins, such as Tether, due to variations in reserve composition and redemption terms.
- The SEC's new stance on stablecoins is not enshrined in law and could potentially be overridden by future legislation like the STABLE Act and the GENIUS Act, which aim to assign regulatory authority to banking regulators.
