US SEC "Covered Stablecoins are not Securities"

The United States Securities and Exchange Commission (SEC) has officially stated that 'Covered Stablecoins' are not considered securities under federal securities laws. However, this statement is limited to Covered Stablecoins that meet specific conditions. It does not apply to algorithm-based stablecoins or tokens for utility and reward purposes.

The SEC's Division of Corporation Finance announced on the 4th (local time) that "Covered Stablecoins, issued and redeemed at a 1-to-1 ratio to the dollar and backed by low-risk liquid assets, do not qualify as securities under securities laws." Covered Stablecoins are defined as virtual assets (cryptocurrencies) pegged to the US dollar, maintaining stable value and used as a means of payment, remittance, and storage.

In the statement, the Division of Corporation Finance cited the issuance and redemption structure and marketing methods of Covered Stablecoins as grounds for their determination, presenting ▲commercial use purposes rather than investment motives expecting profit ▲distribution methods that do not induce speculative trading ▲structures without interest, equity, or control rights ▲full reserve-based redemption guarantees, concluding that Covered Stablecoins lack the characteristics of securities.

The SEC applied the Reves test and the Howey test, which are representative criteria for determining securities, in this judgment. In both criteria, Covered Stablecoins were concluded to function more like 'digital dollars' closer to real currency than investment products. It was specifically stated that "users purchase Covered Stablecoins as a means of payment and remittance rather than expecting profit, making it closer to consumer transactions."

However, it was also clarified that these criteria do not apply to all stablecoins. Covered Stablecoins must be redeemable on a 1-to-1 basis backed by reserves, which the issuer must continuously guarantee. Additionally, the issuer's assets and reserve assets must be stored separately. Profit payments or external asset management are not allowed.

The SEC's statement is expected to positively impact the legislative process of the stablecoin bill and the digital asset market structure bill currently being promoted in the US Congress. The House and Senate have already passed bills on stablecoins at the committee level. Additionally, the House Financial Services Committee plans to hold its first hearing on the digital asset market structure bill soon.