The U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a staff statement explaining how federal securities laws apply to a defined category of USD-referenced stablecoins it terms “Covered Stablecoins.” The Division’s view is that, when issued and sold in the manner described, Covered Stablecoins are not offered or sold as securities under the Securities Act of 1933 or the Securities Exchange Act of 1934, so minting and redemption transactions would not require Securities Act registration or an exemption. The statement limits “Covered Stablecoins” to stablecoins designed to maintain a one-for-one value against the U.S. dollar, redeemable for USD on a one-for-one basis, and backed by a segregated reserve of low-risk, readily liquid assets whose USD value meets or exceeds outstanding coins. The issuer stands ready to mint and redeem at a fixed one-for-one price at any time and in unlimited quantities; minting and redemption may be available to all holders or only to designated intermediaries, with secondary-market price stability supported through arbitrage. Marketing and product features cited as relevant include positioning solely for payments, money transmission, or storing value (including as a “digital dollar”), and the absence of interest, profit rights, governance rights, or an ownership interest in the issuer. The Division analyzes Covered Stablecoins under both Reves (family resemblance test for notes) and Howey (investment contract), concluding purchasers are motivated by consumer or commercial use rather than profit expectations, and that a fully funded reserve is a key risk-reducing feature; examples of reserve assets include USD cash equivalents, demand deposits, U.S. Treasury securities, and registered money market funds, and exclude precious metals and other crypto assets. The Division emphasizes that the statement reflects staff views only, has no legal force or effect, and is not a Commission rule or interpretation. It does not express views on other stablecoin structures, including non-USD stablecoins, algorithmic stablecoins, USD-referenced stablecoins redeemable for assets other than USD, or yield-bearing stablecoins, and notes that conclusions may differ where facts and circumstances vary.
U.S. Securities & Exchange Commission 2025-04-04
U.S. Securities and Exchange Commission staff sets out view that certain fully reserved USD stablecoins are not securities
The SEC’s Division of Corporation Finance clarified that certain USD-referenced stablecoins, termed “Covered Stablecoins,” are not securities under the Securities Act of 1933 or the Securities Exchange Act of 1934. These stablecoins maintain a one-for-one value against the U.S. dollar, backed by low-risk, liquid assets, and are intended for payments or storing value without offering interest or profit rights. The statement reflects staff views only and does not apply to other stablecoin structures or yield-bearing stablecoins.