On April 4, 2025, the U.S. Securities and Exchange Commission (SEC) ruled that stablecoins fully supported by cash or equivalent assets are not securities under U.S. law. This pivotal decision offers much-needed guidance to the crypto industry, especially for top stablecoin providers like Tether (USDT) and Circle (USDC). By easing regulatory hurdles, it could enhance the role of these digital assets in the U.S. financial framework, encouraging greater adoption.
Defining the Scope
The SEC outlined that stablecoins pegged 1:1 to liquid reserves—like U.S. dollars or Treasury securities—do not fall under securities jurisdiction. This is based on the Howey Test, which identifies investment contracts. Stablecoins such as USDT and USDC, backed by clear reserves rather than profit speculation, don’t satisfy the test’s reliance on others’ efforts for returns. Thus, their blockchain minting and redemption are exempt from Securities Act requirements.
This contrasts with past uncertainty. In 2019, ex-SEC official Valerie Szczepanik hinted that asset-tied stablecoins might be securities. The 2025 statement sharpens this view, separating fully backed stablecoins from less reliable models.
Influence on Crypto
The ruling reshapes the stablecoin landscape, dominated by USDT and USDC. By shedding the securities label, it removes a major compliance challenge, potentially attracting more institutional and mainstream financial interest. X discussions show optimism, with users foreseeing stablecoins integrating into traditional finance. Yet, it’s not a blanket exemption – stablecoins without full backing or linked to unstable crypto assets may still be scrutinized.
This selective stance aligns with a U.S. proposal from February 2025. The proposal suggests a two-year ban on stablecoins backed solely by issuer-issued tokens. It reflects growing concerns over opaque and risky stablecoin structures.
Toward Regulatory Progress
The SEC’s announcement meets long-standing demands for crypto clarity. Chairman Gary Gensler has consistently classified Bitcoin as non-securities while stressing compliance elsewhere. This stablecoin decision may signal a move toward a clearer regulatory path, weighing innovation against safety. As of April 7, 2025, the crypto community largely embraces the ruling, though ambiguity persists for less straightforward stablecoins going forward.
