The U.S. Securities and Exchange Commission (SEC) has issued new guidance outlining its stance on certain types of stablecoins, introducing a new regulatory term: ‘Covered Stablecoins.’ The SEC’s Division of Corporate Finance defines Covered Stablecoins as digital assets that maintain a one-to-one peg with the US Dollar, enabling one-to-one exchange for USD. These assets are backed by low-risk, high-liquid reserve assets with a dollar value exceeding the total value of circulating stablecoins. 🤝
This new guidance clarifies that Covered Stablecoins are not considered investment contracts and therefore fall outside of SEC jurisdiction as securities.
However, this definition does not apply to algorithmic stablecoins, yield-stables or any digital asset pegged to non-USD values. The SEC has yet to issue a security determination regarding these categories. 🕵️♀️
The guidance represents important clarity for issuers and market participants within the dollar-pegged stablecoin sector. 📈