The post Covered Stablecoins Gain SEC Approval, Boost Crypto Clarity appeared on BitcoinEthereumNews.com.

The SEC’s Covered Stablecoins category excludes them from securities laws, aiding dollar-backed coins. Only stablecoins with full asset backing and fixed value qualify for the new exemption. Congress advances stablecoin legislation as the SEC prepares for a key crypto trading summit. Recently, the U.S. Securities and Exchange Commission created a new category called “Covered Stablecoins,” which describes the rules for certain dollar-backed digital currencies, including USDC as an example. As discussed previously, this category does not classify these stablecoins as federal securities, in part because they are backed on a one-to-one basis with U.S. dollars and are issued by safe and liquid assets. Now, with this entire regulatory update, USDC, PayPal’s new PYUSD, and maybe some others can fundamentally have a stronger place in the cryptocurrency space, as opposed to that gray area (outside of regulation), based on the definition and rules of the new Covered Stablecoins category. Dollar-Backed Coins Get Green Light According to the SEC’s Division of Corporation Finance, one type of stablecoin, known as Covered Stablecoins, acts both as a reliable store of value and an exchange currency. Digital tokens from these coins do not include the characteristics of investments like profit or financial returns that standard digital assets do. The companies that issue these dollar-backed stablecoins avoid strict securities oversight because they do not meet the criteria for securities registration and oversight. Not All Stablecoins Qualify This ruling prevents algorithmic stablecoins from participating, along with stablecoins linked to assets and those capable of providing interest. SEC declared that stablecoins earn this exception only if their backed assets’ value reaches or exceeds their active circulating supply. According to the agency the stability of these coins should be linked to the U.S. dollar value to operate as dependable exchange instruments. Legal Tests Shape SEC’s Stance Using the Reves…

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Filed under: News - @ April 5, 2025 6:15 pm