U.S. Securities and Exchange Commission Commissioner Caroline A. Crenshaw issued a statement criticising a Division of Corporation Finance staff statement concluding that certain “stablecoins” are not securities. She argued the staff analysis contains legal and factual errors that mischaracterise how USD-stablecoins function in practice and materially understate their risks. Crenshaw said most retail purchasers obtain USD-stablecoins through intermediaries on secondary markets, not directly from issuers, and cited estimates that over 90% of USD-stablecoins in circulation are distributed this way, including USDC and USDT. In that structure, retail holders typically can redeem only through the intermediary and may have no contractual recourse against the issuer, which she said undermines the staff’s reliance on issuer “risk-reducing features” such as reserves and one-for-one redemption rights. She also challenged claims that reserves imply an ability to meet unlimited future redemptions, pointing to run risk and “self-reinforcing” redemption cycles, and criticised reliance on “proof of reserves” reports, noting warnings from the SEC and the Public Company Accounting Oversight Board that such reports are unregulated and provide limited assurance. On the legal framing, she argued that issuer reserves do not collateralise retail-held stablecoins for purposes of the Reves test, leaving holders exposed to insolvency risk and opaque, non-public issuer-intermediary arrangements. The statement also questioned whether any existing stablecoins can meet the staff’s “Covered Stablecoin” criteria, given the staff’s apparent assumption that issuers mint and redeem directly with retail holders on a one-for-one basis in unlimited quantities.

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