SEC Corporate Finance Department: Fully reserved, highly liquid, and dollar backed stablecoins are not securities

According to Foresight News, the Corporate Finance Department of the US Securities and Exchange Commission (SEC) has issued guidance on stablecoins. After comprehensive consideration, the department believes that "covered stablecoins with full reserves, strong liquidity, and supported by the US dollar" do not constitute securities according to the "Reves test", for the following reasons: (1) the seller uses the proceeds to fund the reserves, while the buyer is not incentivized by the expected return on their funds; (2) The distribution method of stablecoins does not encourage speculation or investment trading; (3) Rational buyers usually believe that stablecoins are not investments; (4) Adequate reserves can meet redemption needs at any time, which is a risk reducing feature of stablecoins. In short, the issuance and sale of stablecoins aim to promote commercial or consumer use. The department believes that the issuance and sale of Covered Stablecoins in the manner and circumstances described in this statement does not involve the issuance and sale of securities as defined in Section 2 (a) (1) of the Securities Act or Section 3 (a) (10) of the Securities Exchange Act of 1934. Therefore, personnel involved in the "minting" (or creation) and redemption of stablecoins covered by the Securities Act do not need to register these transactions with the Commission under the Securities Act, nor do they need to comply with one of the registration exemptions under the Securities Act. The stablecoins targeted by this statement are intended to maintain a stable value relative to the US dollar on a one-to-one basis, and can be exchanged for US dollars on a one-to-one basis (i.e. one stablecoin for one US dollar), supported by assets held in reserves that are considered low-risk and easily liquid, with a US dollar value equal to or exceeding the redemption value of stablecoins in circulation. The federal court regards the Reves test as a comprehensive test, in which no single factor can be considered separately to determine whether a bill belongs to a security.