SEC Stablecoin Guidelines: Criticisms and Industry Response
SEC Stablecoin Guidelines Face Criticism
SEC Commissioner Caroline Crenshaw has publicly criticized the agency's recently released stablecoin guidelines, alleging that they downplay risks and present a distorted view of the USD-stablecoin market. Many in the crypto industry, however, see the guidelines as a positive step.
Crenshaw's statement highlighted what she considers "legal and factual errors" within the SEC's assessment. She specifically challenged the SEC's assertion that certain actions by issuers reduce risk, arguing that the analysis was inaccurate.
Differing Perspectives on the New Guidelines
The SEC's guidelines classify stablecoins meeting specific criteria as "non-securities," exempting them from certain transaction reporting requirements. While the agency acknowledged that some stablecoins are accessible to retail investors only through intermediaries, Crenshaw countered that this is the norm, not the exception, with over 90% of USD-stablecoins distributed via secondary markets like crypto trading platforms.
Further, Crenshaw disputes the SEC's assurance that issuers can handle unlimited redemptions based solely on reserve value exceeding supply. She emphasizes that this ignores broader financial health and solvency considerations, including liabilities and risks from proprietary activities. She highlighted that stablecoins inherently carry risk, particularly during market downturns.
Industry Response
Despite Crenshaw's criticism, many within the crypto industry welcomed the SEC's decision. Comments included calling it a "clear step in focusing on what really matters" and expressing that it "feels like progress for crypto folks trying to play by the rules." Some, however, expressed that this positive step came too late, wishing for similar clarity years prior.
Recent Developments
This news follows reports of Tether, a major stablecoin issuer, engaging with a Big Four accounting firm for an audit to verify its USDT stablecoin's 1:1 backing. The timing of this audit and the SEC's new guidelines highlight the ongoing evolution and scrutiny within the stablecoin sector.
Codeum, a blockchain security and development platform, offers comprehensive services to protect your crypto assets and projects. Our offerings include smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies. Contact us to learn how we can help secure your blockchain initiative.