Certain stablecoins aren't securities, SEC says in new guidance

"Covered stablecoins," or tokens backed by physical fiat or high-liquidity assets and redeemable 1:1 with the US dollar are exempted from reporting requirements.

Under new SEC guidelines, stablecoins that meet certain criteria are considered ”non-securities” and are exempt from transaction reporting requirements, the United States Securities and Exchange Commission said in a notice published April 4.

"Covered stablecoins," as the SEC classifies them, are fully backed by physical fiat reserves or short-term, low-risk, highly liquid instruments and are redeemable at a 1:1 ratio with US dollars.

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 uncertain.

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