{"id":20691,"date":"2025-04-04T21:46:33","date_gmt":"2025-04-04T21:46:33","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=20691"},"modified":"2025-04-04T21:46:33","modified_gmt":"2025-04-04T21:46:33","slug":"sec-lays-out-guidelines-for-stablecoins-excludes-algorithmic-tokens","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=20691","title":{"rendered":"SEC lays out guidelines for stablecoins, excludes algorithmic tokens"},"content":{"rendered":"
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\"SEC<\/p>\n

The United States Securities and Exchange Commission (SEC) released a statement on April 4 establishing guidelines for stablecoins. <\/p>\n

In an April 4 statement, the agency minted a new term, “covered stablecoins,” classifying them as non-securities and exempting such tokens\u2019 transactions from reporting requirements.<\/p>\n

According to the SEC’s definition<\/a>, a “covered stablecoin” is fully backed by physical fiat reserves or short-term, low-risk, highly liquid instruments and is fully redeemable at a 1:1 ratio with US dollars.<\/p>\n

The definition precludes algorithmic stablecoins that maintain their US dollar peg using software or an automated trading strategy, leaving the regulatory status of algorithmic stablecoins, synthetic dollars, and yield-bearing fiat tokens<\/a> uncertain.<\/p>\n

\"SEC,
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Current stablecoin market overview. Source: <\/em>RWA.XYZ<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

Industry leaders and executives are currently pushing for regulatory changes that would allow stablecoin issuers to share yield opportunities with stablecoin holders and offer onchain interest<\/a>.<\/p>\n

According to the new guidelines, covered stablecoin issuers must never co-mingle asset reserves with operational capital or offer tokenholders interest, profit, or yield opportunities. Additionally, the covered stablecoin issuers must never use their reserves for investing or market speculation.<\/p>\n

Related: <\/strong><\/em>Stablecoin supply surges $30B in Q1 as investors hedge against volatility<\/strong><\/em><\/a><\/p>\n

SEC’s definition of “covered stablecoin” consistent with broader US policy objectives<\/h2>\n

The SEC’s criteria for covered stablecoins are consistent with regulations stipulated in the GENIUS stablecoin bill, introduced by Senator Bill Hagerty<\/a>, and the Stable Act of 2025, introduced by Rep. French Hill<\/a>.<\/p>\n

The proposed legislation aims to protect the status of the US dollar as the global reserve currency through stablecoins that are backed by US dollars and government securities.<\/p>\n

\"SEC,
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The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) of 2025 Act. Source: <\/em>US Senate<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

Centralized stablecoin issuers back their tokens with US dollar deposits held in regulated financial institutions and short-term US Treasury Bills, driving demand for US dollars and US government debt.<\/p>\n

Tether, the world’s largest stablecoin issuer, is now the seventh-largest holder of US Treasuries<\/a>, beating out countries like Canada, Germany, and South Korea.<\/p>\n

Speaking at the first White House Digital Asset Summit on March 7, US Treasury Secretary Scott Bessent said the US would use stablecoins to extend US dollar dominance<\/a>.<\/p>\n

Bessent said that regulating stablecoins was central to the administration’s digital asset strategy and a top regulatory priority during the current legislative session.<\/p>\n

Magazine: <\/strong><\/em>Bitcoin payments are being undermined by centralized stablecoins<\/strong><\/em><\/a><\/p>\n