SEC Division Issues Statement on Stablecoins

On April 4, 2025, the Division of Corporate Finance (the “Division”) of the Securities and Exchange Commission (the “SEC”) issued a Statement on Stablecoins (the “Statement”). Setting policy by issuance of a statement of this sort is itself unusual, although the guidance has been in the works for some time and tracks in some ways the proposed legislation in the federal Congress that is drawing some bilateral support. The Statement defines “Covered Stablecoins” as digital currencies “that are designed to maintain a stable value relative to the United States Dollar, or ‘USD,’ on a one-for-one basis, can be redeemed for USD on a one-for-one basis (i.e., one stablecoin to one USD), and are backed by assets held in a reserve that are considered low-risk and readily liquid with a USD-value that meets or exceeds the redemption value of the stablecoins in circulation.” The Division opines that such Covered Stablecoins are effectively not securities and that persons who are creating (“minting”) and redeeming them are not required to register such transactions with the SEC. While Covered Stablecoins must be immediately redeemable for U.S. dollars, they are not backed by the U.S. Government and the holder does not have direct access to the collateral. It is to be seen whether and how the analysis in the Statement will be used with respect to other digital currencies.