The U.S. SEC is taking a step back from certain stablecoins, saying they don’t count as securities — which basically means the agency won’t be regulating them like it does stocks or crypto tokens it sees as investments. This is a big shift and adds to the list of crypto areas the SEC is slowly letting go of, like memecoins and mining.
Not Every Stablecoin is a Security
🚨NEW: The @SECGov Division of Corporation Finance has just put out guidance on stablecoins.
The agency has minted a new term — ‘Covered Stablecoins’ which describe stablecoins that “maintain a stable value relative to the United States Dollar, on a one-for-one basis, can be… pic.twitter.com/g3HjCc7mHa
— Eleanor Terrett (@EleanorTerrett) April 4, 2025
According to a post by Fox Business journalist Eleanor Terrett, the SEC has introduced a new category called “Covered Stablecoins.” These digital coins are always equal in value to the U.S. dollar — one coin equals one dollar. To qualify, these coins must be backed by safe, easy-to-sell assets that match or exceed the amount of coins in circulation. This means they’re considered stable, safe, and easily redeemable for real dollars at any time.
The SEC’s Division of Corporation Finance made it clear that these kinds of stablecoins are not being treated as investments. Because of that, they do not fall under the SEC’s jurisdiction — which is a big deal for projects trying to stay compliant while offering dollar-backed crypto.
However, this doesn’t apply to all stablecoins. The SEC says this guidance doesn’t include algorithmic stablecoins (which use code to keep their value stable), stablecoins that offer yield or interest, or coins tied to other assets like gold or foreign currencies. These other types might still be considered securities or face other regulations.
This new update is a positive step for regulated, dollar-backed stablecoins like USDC or PayPal’s PYUSD, giving them a bit more breathing room and clarity. But the rest of the stablecoin space still sits in a gray area.
But No Interest for Users
But there is something else that is very important to note: Even though stablecoin companies can make money (like through interest on their reserves), they’re not allowed to share that money with users. So, users won’t earn interest from holding these covered stablecoins.
Coinbase CEO Brian Armstrong isn’t happy about that. He said he wants Congress to change the rules so users can earn interest without the coins being considered securities.
Circle Applauds, Congress Pushes Ahead
Circle President Heath Tarbert praised the SEC for its decision, saying that only stablecoins with real backing, like USDC, qualify. At the same time, Congress is working on stablecoin rules. Bills are moving through both the House and Senate with strong support from both parties.
As political discussions grow, with Trump supporters pushing their own crypto plans, everyone’s attention is on the SEC’s upcoming crypto summit, where trading will be a major focus.
