Recently, the U.S. SEC made a major move that could reshape the stablecoin market. In one of its clearest statements yet, the agency said that some stablecoins now labeled “covered stablecoins” may not be considered securities, as long as they meet strict conditions.
This update is already sparking industry reactions, with Tether reportedly considering a shift in strategy to align with the SEC’s new guidance.
“Covered Stablecoins are not marketed as investments; rather, they are marketed as a stable, quick, reliable and accessible means of transferring value, or storing value and not for potential profit or as investments,” the SEC stated.
The SEC’s new guidance explains what makes a stablecoin a “covered stablecoin” which means that it might not be treated as a security. Notably, to meet the criteria, the stablecoin must be fully backed 1:1 by the U.S. dollar , must be backed by low-risk, highly liquid assets and must be redeemable at full value at any time,
Crucially, these tokens can’t promise profits, pay interest, offer voting rights, or represent ownership. They must be used only for payments, transfers, or storing value and not as investments.
Since these stablecoins are sold as “digital dollars” and not as investments, the SEC says that they don’t count as securities under U.S. law. This is a rare clear move from the SEC, which usually takes a vague or enforcement-heavy stance on crypto.
Mixed Reactions
White House crypto advisor David Sacks praised the move, calling it long-overdue clarity that reduces regulatory hurdles for fully-backed, liquid, dollar-pegged stablecoins. He noted that such tokens no longer need to be registered under the Securities Act.
However, SEC Commissioner Caroline Crenshaw criticised, warning that the guidance oversimplifies the stablecoin market and misrepresents key legal concerns. She argued it downplays risks and offers a misleading picture of how these tokens actually operate.
SEC Rules Boost USDC but Put Pressure on USDT
The new guidelines help stablecoins like USDC, but they create concerns for Tether’s USDT. This is because the SEC doesn’t allow stablecoins to be backed by crypto or gold — both of which are part of USDT’s reserves.
Forbes reporter Nina Bambysheva shared that Tether is considering a new stablecoin that follows U.S. rules. The new coin would be backed only by cash and U.S. Treasuries, a big shift for Tether as it faces more regulatory pressure.
Besides, Crypto analyst Novacula Occami also noted that Tether’s use of Bitcoin and gold in its reserves may disqualify USDT from the SEC’s “covered stablecoin” category, potentially subjecting it to stricter U.S. securities regulations.
Tether CEO Not Too Concerned Over Potential US Ban
Tether isn’t too concerned about a possible US ban on its current stablecoin, USDT, according to CTO Paolo Ardoino. The company is already thinking ahead by planning a new U.S.-based stablecoin that would fully comply with upcoming American regulations.
Ardoino said the company sees USDT as ideal for emerging markets but is open to creating a separate stablecoin tailored for the U.S. market.
Stablecoins are seeing growing adoption, even as the broader crypto market faces a tough first quarter. Despite volatility, daily usage is rising. Notably, the stablecoin market grew by over $30 billion in Q1 alone, showing strong demand.
