SEC Clarifies Jurisdiction Limits on Stablecoins Amid Regulatory Shifts

According to CoinDesk, the U.S. Securities and Exchange Commission (SEC) has clarified its stance on certain stablecoins, stating that it does not have jurisdiction over these digital assets or their issuers. This announcement is part of a broader effort by the SEC, under the leadership appointed by U.S. President Donald Trump, to delineate areas of the crypto sector that fall outside its regulatory scope. The agency's Crypto Task Force has been instrumental in easing regulatory pressures on digital assets, previously identifying memecoins and proof-of-work crypto mining as outside its purview. The latest statement from the SEC's Division of Corporation Finance, issued on Friday, asserts that certain stablecoins do not constitute securities and therefore do not require registration under the Securities Act. The statement specifies that transactions involving the minting and redeeming of these stablecoins do not need to be registered with the SEC, as they are intended for use in commerce, payments, money transmission, and value storage, rather than as investment vehicles. However, the statement's criteria may exclude Tether's USDT, as it notes that acceptable reserves should not include precious metals or other crypto assets, which are part of Tether's reserves. Additionally, the requirement for tokens to be redeemable for dollars at any time may conflict with Tether's terms of service, which suggest potential restrictions. Congress is actively working on establishing new standards for stablecoin issuance, with the House Financial Services Committee advancing a bill towards a vote in the House of Representatives. The Senate is also considering a similar bill, both receiving bipartisan support. Despite their stable nature, stablecoins have become a contentious political issue, with the Trump-backed World Liberty Financial proposing its own stablecoin, and concerns from some congressional Democrats about Elon Musk's potential involvement in the sector. SEC Commissioner Hester Peirce, leading the agency's task force, emphasizes the importance of these preliminary, nonbinding actions to reduce crypto resistance at the SEC, suggesting that non-fungible tokens (NFTs) may also be considered for similar statements. The SEC is preparing for its second crypto summit next week, focusing on trading. The agency may soon see a leadership change if Trump's nominee for permanent chairman, Paul Atkins, is confirmed by the Senate. Interim Chairman Mark Uyeda has already initiated significant changes to the SEC's approach to crypto regulation, including dismissing several enforcement cases against digital asset businesses, although some cases remain active.