In April 2025, the U.S. Securities and Exchange Commission (SEC) Division of Corporate Finance issued a policy statement on "stablecoins", giving the clearest institutional view on the question of "whether stablecoins constitute securities".
This statement does not have legal effect, but the signal it sends in regulatory practice cannot be ignored. For the first time, it systematically explains under what conditions a certain type of "compliant stablecoin" is not subject to the requirements of federal securities laws.
For the industry, this is a relatively clear legal qualitative reference, and it also constitutes an important basis for the design and compliance judgment of future stablecoin projects.
Scope of policy application: Three basic conditions for "compliant stablecoins"
The SEC made it clear in its statement that the objects of its discussion are limited to stablecoins that have the following three characteristics at the same time:
1. Anchored to the US dollar:The currency value maintains a fixed exchange relationship of 1:1 with the US dollar;
2. Redeemable for US dollars:The issuer supports users to exchange stablecoins for US dollars at a ratio of 1:1 at any time;
3. Backed by real reserves: Reserve assets must be low-risk and highly liquid assets, and the total value must always be greater than or equal to the total amount of stablecoins in circulation. Such products are called "covered stablecoins" by the SEC, and it is clearly stated that their use scenarios should be limited to commercial functions such as payment, transfer, and storage, and do not involve income rights or investment rights, nor should they have securities characteristics such as governance rights, profit dividends or asset claims. In other words, only when the anchoring logic is clear, the redemption mechanism is complete, and the asset reserves are stable and transparent, the SEC will regard such products as covered stablecoins that may not constitute securities.
From the perspective of the compliant stablecoin characteristics emphasized in the document, it does not apply to the following types of stablecoins:
This classification basically excludes most of the non-custodial stablecoin products on the current market that have income attributes or insufficient reserve transparency.
SEC's core judgment logic: application of two major judicial test analysis
The analysis part of the statement is based on two U.S. securities law case standards:
1. Reves case standard:Determine whether a financial instrument constitutes a security debt instrument such as a "note";
2. Howey case standard:Determine whether an arrangement constitutes an "investment contract", which is a typical securities issuance model.
These two standards constitute an important path for the U.S. federal court system to characterize financial instruments on the basis of "facts first", and are also the key analytical tools for many crypto asset projects to be identified as securities in SEC investigations.
The SEC analyzed "compliant stablecoins" item by item through four dimensions:
First, the true intention of the transaction purpose.The document points out that buyers of compliant stablecoins are usually not motivated by profit, but by commercial functions such as payment, transfer, and storage. This type of stablecoin also does not provide users with any income rights or investment return commitments. Therefore, there is an essential difference from the traditional "financing notes".
Second, the characteristics of the circulation method. Although these stablecoins can be circulated in the secondary market, due to their design goal of 1:1 anchoring, limited price fluctuations, and the existence of a redemption mechanism, they do not have typical speculation or investment incentives.
Third, investor expectations. The SEC emphasized that this type of stablecoin has not been marketed as an "investment opportunity" and will not lead holders to form an expectation of "receiving future returns".
Fourth, the risk control mechanism. This is the key point emphasized in the statement. The reserve assets of compliant stablecoins must meet the following requirements:
Based on these structural arrangements, the SEC believes that this type of stablecoin has significant risk control mechanisms, which is sufficient to support its judgment that the securities law is not applicable.
The SEC further analyzed and pointed out that even if it does not constitute a "note", whether it constitutes an "investment contract" still needs to apply the Howey test.
The four elements of the Howey test are:
The statement believes that users of Covered Stablecoins have no investment purpose when purchasing, and their funds are only used to obtain stablecoins of equal value, rather than to share certain profit expectations.
In addition, this type of stablecoin is positioned in the market as a "payment and storage tool" rather than a "future income certificate", and it is not promoted as an investment product that can bring asset appreciation. Therefore, it does not meet the two core standards of "profit expectation" and "others' efforts" in the Howey test.
The SEC concluded that the structure and promotion of Covered Stablecoins do not have the legal attributes of an investment contract, and therefore do not constitute securities.
Direct impact on the industry: Providing a compliance path for reference
From the perspective of regulatory policy, the key significance of this document is not "relaxation", but the first clear delineation of a stablecoin model that can be regarded as non-securities, providing a reference framework for market participants in product design, disclosure obligations and risk management.
It also sends the following important signals:
1. The reserve mechanism and redemption mechanism are closely related to the compliance boundary.Stablecoins that lack transparency or mix reserve assets may be regarded as securities.
2. The income attribute is extremely sensitive. As long as it involves "interest", "reward", "dividend" and "governance rights", it may be presumed to be an investment product.
3. Promotional content and market positioning will be included in the judgment. The SEC specifically pointed out that whether investors regard an asset as a security depends in part on how the project party promotes its use and functions to the outside world.
4. Regulatory judgments will be based on the facts of individual cases, and the document only provides guidance. The statement finally emphasized that its analysis only applies to specific types of asset-backed stablecoins, and whether the actual project constitutes a security still requires specific analysis of specific issues.
Mankiw Lawyer Summary
For entrepreneurs and project parties, this is a compliance path with clear guidance but high standards. It also reflects from the side that US regulators do not intend to "one size fits all" to ban stablecoin business, but are willing to establish an operational boundary through fact finding and regulatory precedents.
For overseas institutions, compliant payment service providers, and even traditional financial institutions, this may be a clear compliance window that can be explored. It is worth paying close attention to whether there will be further No-action Letters, test cases or formal legislative supplements in the future.
If the SEC or the court recognizes in actual law enforcement in the future that a certain stablecoin meets these conditions and does not constitute a security, it will truly establish the legal status of this model. This is undoubtedly a crucial signal for the entire Web3 payment and cross-border clearing industry.
If you need further legal judgment on stablecoins, payment tokens or compliance structure design, please contact Mankiw's legal team. We will continue to follow the latest developments in global regulatory policies and provide constructive compliance advice.
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