The post SEC confirms stablecoins are not securities but questions including yield appeared on BitcoinEthereumNews.com.

Stablecoins backed by cash or cash-equivalent reserves and redeemable for US dollars on a one-to-one basis are not securities under federal law, the Securities and Exchange Commission (SEC) said on April 4, offering one of its clearest positions yet on the regulatory treatment of crypto. In a public statement, the SEC’s Division of Corporation Finance outlined its legal views on what it termed “Covered Stablecoins” — a category that includes fiat-backed digital tokens designed to maintain price stability through fully reserved dollar holdings. According to the Division, the offer and sale of stablecoins do not involve securities transactions and, therefore, do not require registration under the Securities Act of 1933 or the Securities Exchange Act of 1934. The move is likely to provide legal clarity for stablecoin issuers, fintech firms, and crypto payment providers that have long operated in regulatory uncertainty. Used for payments, not profit According to the SEC, Covered Stablecoins are designed and marketed solely as tools for payments, money transmission, and value storage. They do not grant holders interest, profits, governance rights, or ownership claims and are typically described as “digital dollars” rather than investment products. The SEC emphasized that these tokens are not promoted as profit-generating instruments, a key distinction under federal securities law. The regulator’s conclusion was based on two landmark legal standards: the Reves v. Ernst & Young test and the Howey test. Under Reves, the Division found that Covered Stablecoins more closely resemble instruments used for routine commercial transactions rather than speculative notes or debt securities. The agency pointed to the buyer’s non-investment motivation and the lack of trading for profit as key reasons the tokens fall outside the securities definition. The SEC also applied the Howey test, which examines whether an arrangement involves investing money in a common enterprise with an expectation of…

---

Filed under: News - @ April 4, 2025 10:27 pm