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SEC Drops a Bombshell — Covered Stablecoins Get the Green Light
In a huge regulatory development, the U.S. Securities and Exchange Commission (SEC) announced on April 4 that "covered" stablecoins — those fully backed by U.S. dollars and easily convertible to fiat — are not considered securities under U.S. law.
That means top-dollar-backed tokens like USDT (Tether) and USDC (Circle) are finally getting some legal breathing room.
What Are Covered Stablecoins, Anyway?
The SEC defines covered stablecoins as digital tokens that are:
- Pegged 1:1 to the U.S. dollar
- Backed by cash or cash-equivalent low-risk assets (like U.S. Treasuries)
- Used for payments, storing value, or transmitting funds
- Redeemable on demand by the issuer
In short: they function like digital dollars. And the SEC now says if you're minting or redeeming these types of stablecoins, you don’t need to register with them — because these tokens aren’t securities in their eyes.
What About Algorithmic Stablecoins?
There’s a catch.
While dollar-backed stablecoins got the green light, the SEC pointedly did not extend this clarity to algorithmic stablecoins — those backed by code and economic mechanisms rather than dollars. Think: the now-infamous TerraUSD (UST) that collapsed in 2022 and wiped nearly $45 billion from the market.
That silence speaks volumes. It looks like algorithmic stablecoins are still in regulatory limbo, and may face stricter scrutiny moving forward.
Why This Matters — And Why Now
This isn’t just a one-off announcement. It aligns perfectly with several bills currently circulating in the U.S. Senate, including the GENIUS Stablecoin Bill and the Stable Act of 2025. Both aim to create a clear legal framework around stablecoins and preserve the U.S. dollar’s role as the global reserve currency.
Under these bills, big-name stablecoin issuers like Tether and Circle would fall under Federal Reserve oversight, ensuring their dollar reserves are held in regulated banks and short-term Treasuries.
With USDT now sitting as the world’s third-largest crypto and dominating the stablecoin market with over $144 billion in market cap, the timing of this SEC clarification is anything but random.
Crypto News: It’s a Bullish Signal for U.S. Crypto
The SEC’s new stance on dollar-backed stablecoins is a major win for the U.S. crypto sector. It signals a shift toward clearer regulations, something the industry has been begging for.
With legal clarity comes more innovation, institutional involvement, and consumer trust. And with the U.S. potentially creating a stablecoin-friendly framework, the country could finally catch up in the global digital asset race.
English (US) · 