SEC Declares Some Stablecoins Non-Securities: What This Means for the Crypto Market

New SEC Guidelines for Stablecoins: A Turning Point for Cryptocurrency Regulation

New SEC Guidelines for Stablecoins – On April 4, 2025, the U.S. Securities and Exchange Commission (SEC) released new guidelines that categorize certain stablecoins as “non-securities”, exempting them from transaction reporting requirements. These covered stablecoins must be fully backed by physical fiat reserves or short-term, low-risk, highly liquid instruments and must be redeemable at a 1:1 ratio with US dollars.

Algorithmic Stablecoins Excluded from Definition

The SEC’s updated guidelines specifically exclude algorithmic stablecoins, which use software or automated trading strategies to maintain their US dollar peg. This leaves the regulatory status of algorithmic stablecoins, synthetic dollars, and yield-bearing fiat tokens uncertain, with ongoing discussions about their future in the regulatory landscape.

New Restrictions for Stablecoin Issuers

Under the new rules, stablecoin issuers are prohibited from mixing their asset reserves with operational capital or offering interest, profit, or yield opportunities to token holders. They are also restricted from using their reserves for investment or market speculation. These regulations align with broader U.S. policy objectives, particularly the intention to protect the US dollar’s role as the global reserve currency.

Legislative Support for Stablecoin Regulation

The SEC’s criteria are in line with the GENIUS stablecoin bill and the Stable Act of 2025, which have been introduced in U.S. legislation. These bills aim to regulate stablecoins backed by US dollars and government securities, thereby strengthening demand for U.S. Treasury Bills and U.S. government debt.

Impact on Tether and the U.S. Treasury

Tether, the world’s largest stablecoin issuer, has become the seventh-largest holder of US Treasuries, surpassing countries like Canada, Germany, and South Korea. During the White House Digital Asset Summit in March, US Treasury Secretary Scott Bessent emphasized that regulating stablecoins is crucial for extending the dominance of the US dollar in global markets.

These regulatory updates highlight the growing importance of stablecoins in the digital asset ecosystem, with the U.S. taking steps to ensure their integration into broader financial policies.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.