The U.S. SEC has issued a key update about stablecoins. The update is on stablecoins pegged to the U.S. dollar. The SEC explained that stablecoins like USDT (Tether) and USDC (Circle) are not considered to be securities.
However, secondly, the agency informed that there is no registration required to mint or redeem such coins. This clarification gives stablecoin issuers and their users more regulatory clarity. The SEC ruling is concerned with so-called “covered” stablecoins that are fully collateralized and preserve a stable value.
The tokens, like USDT and USDC, are pegged on a one-to-one basis to the U.S. dollar and are redeemable on an easy basis. The process of offering and selling these stablecoins is not the sale of securities to the SEC. This announcement occurs during a key moment in the stablecoin market. Combined, USDT and USDC are worth over $200 billion in market value.
With stablecoin issuances even seen being considered by financial powerhouses such as Bank of America, market experts estimate the aggregate supply to reach the trillions. The CEO of Bank of America, Brian Moynihan, indicated interest in getting into the stablecoin market if regulations permit.
SEC eases burden on stablecoin issuers and users
However, the SEC announcement tracks with current efforts in the US to regulate stablecoins. This past week saw the House Financial Services Committee advance a bill denominated as STABLE.
In the case it passes into law, this bill would establish a regulatory regime for stablecoins with tight reserve and capital requirements. Stablecoins would be required to be fully backed on a one-to-one basis by reserves and subject to anti-money laundering standards.
As the stablecoin market continues to accelerate, the clarity provided by the SEC will assist lawmakers in developing fuller regulations. Exempting covered stablecoins from the rules of the securities laws has effectively sanctioned the emerging market to grow freely without necessitating onerous registration procedures.
Nonetheless, the SEC’s stance brings much-needed clarity to those engaged in minting or redeeming stablecoins. The commission clarified that those who are involved in these activities do not require registration of their transactions. This is an important step because it lessens the regulatory load on users and issuers of stablecoins.
