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In a pivotal move for the crypto industry, the U.S. Securities and Exchange Commission (SEC) has issued guidance on stablecoins, bringing fresh clarity to a fast-growing segment of the digital asset market.
The SEC's Division of Corporation Finance issued a statement on Friday as part of efforts to provide greater clarity on the application of the federal securities laws to cryptocurrencies, providing its views on the "stablecoin" asset class.
Stablecoins in the context of the statement are those that are designed to maintain a stable value relative to USD and can be redeemed for USD on a one-for-one basis. They are backed by assets held in a reserve considered low-risk and readily liquid with a USD value that meets or exceeds the redemption value of the stablecoins in circulation. It refers to this as "Covered Stablecoins."
Arman Shirinyan"It is the Division’s view that the offer and sale of Covered Stablecoins, in the manner and under the circumstances described in this statement, do not involve the offer and sale of securities," according to the SEC.
Coinbase CEO reacts
Reacting to SEC's latest move, Coinbase CEO Brian Armstrong posted on X, saying, "Very helpful clarification." The SEC's clarification comes as the stablecoin sector of crypto grows in anticipation of crypto legislation this year that might focus on stablecoins.
Alex DovbnyaHowever, the SEC’s definition of a covered stablecoin prohibits the issuer from paying interest to the user because doing so would subject the issuer to securities laws.
That’s a topic the Coinbase co-founder hopes will be addressed. On CNBC earlier this week, Armstrong expressed his concern about the idea that consumers cannot earn interest on stablecoins.
In a tweet this week, Armstrong stated that U.S. stablecoin legislation should allow consumers to earn interest through stablecoins, and the interest earned from reserve assets should be paid directly to stablecoin holders. While the technology already exists, the law has not caught up, and stablecoins currently cannot enjoy the exemption that securities laws allow issuers to pay interest to users.
Vladislav Sopov
Dan Burgin