SEC, Congress Address Stablecoin Regulatory Framework

The U.S. Securities and Exchange Commission (SEC) has clarified that most stablecoins, referred to as 'covered stablecoins,' are not considered securities, exempting them from registration requirements. These stablecoins are fully backed by cash or cash-equivalent reserves and are redeemable on a one-to-one basis with the U.S. dollar, designed primarily for payments rather than investment. The House Financial Services Committee has approved the STABLE Act, which includes reserve and anti-money laundering standards, moving it closer to becoming law. The SEC's stance aligns with ongoing legislative efforts, including the STABLE Act and the GENIUS Act, aimed at creating a regulatory framework for stablecoins in Congress. There remains a push for regulatory changes to allow stablecoin issuers to offer interest-bearing opportunities, a point of contention highlighted by Coinbase CEO Brian Armstrong. This evolving regulatory landscape reflects the growing importance of stablecoins in the financial ecosystem and the need to balance innovation with legal clarity.