On April 5, from Washington D.C. the SEC stated that Covered Stablecoins are not subject to their regulatory authority. The division of corporation finance under SEC published this news to make crypto asset laws easier to understand.
Under new SEC guidelines Covered Stablecoins refer to token assets tied to the USD that maintain one to one price parity with the dollar while being available for exchange back into USD. Based on the agency’s data these stablecoins hold reserves that consist of easily sold financially secure assets which exceed the total amount of issued tokens.
Under the defined conditions and procedures described here, selling covered stablecoins does not involve securities transactions according to the Division. Under Section 2(a)(1) of the Securities Act of 1933 no registration is necessary for these stablecoins since they follow this interpretation.
SEC Clarifies Rules for Covered Stablecoins’ Regulation
This announcement creates an important milestone for stablecoin rules. Digital assets faced major development issues because people did not understand if they qualified as s ecurities. The SEC seeks to help companies operate more easily by defining which USD-backed stablecoins do not require investor protections.
The SEC guidance covers limited types of stablecoins while omitting algorithmic tokens that generate earnings and those that are not tethered to USD. The continues to monitor many types of stablecoins because the new guidance did not touch most of them.
The SEC’s official statement does not mention specific stablecoin names but USDT and USDC fall into the category of “Covered Stablecoins” according to their definition.
The agency determined that Covered Stablecoins are intended solely as a payment method not meant for investment or speculation. The owners create stablecoins using sale money that goes entirely to bond reserves and the holders of these tokens do not seek investment gains.
Those handling transactions that mint and exchange Covered Stablecoins need not register with the SEC under current rules from the agency.
The new rules emerged because U.S. authorities still develop regulations to manage the digital assets market. The agency now shows a refined approach to monitor stablecoin activities by keeping their existing authority over multiple crypto securities.
The new guidance creates conditions that make digital assets using fiat currencies more accessible to large companies that want to follow legal requirements properly.
The agency stated that its guidance applies only to the described scenario and every stablecoin project must be examined separately for approval.
By setting new standards the SEC now makes it easier for Covered Stablecoins to operate legally in financial markets.