The U.S. Securities and Exchange Commission (SEC) has issued updated guidelines classifying stablecoins. It has allowed certain USD-pegged stablecoins as cash equivalents. The development comes at a time when the SEC is formulating rules for crypto to modernize traditional finance in the nation.
SEC Issues Interim Guidance on Stablecoins
According to Bloomberg News, the SEC has issued stopgap accounting guidance, allowing certain fully backed, redeemable USD stablecoins to be classified as cash equivalents, offering interim clarity while broader rules are developed.
Only stablecoins with a consistent 1:1 peg, full collateralization with high liquidity assets, and on-demand redemption rights qualify as cash equivalents. This move is a part of a broader strategy for increasing institutional acceptance of compliant stablecoins as legitimate digital cash substitutes within the traditional financial system.
The Commission Ensures Transparency in Digital Asset Space
The classification ensures that qualifying stablecoins carry a risk profile that enhances transparency and reduces uncertainty for institutional investors. This move is a collaborative effort with the GENIUS Act to modernize crypto regulation and integrate digital assets into the mainstream financial system.
Under the leadership of Chairman Paul Atkins, the SEC is gradually changing some of its stringent rules to accommodate crypto assets within the existing financial infrastructure.
Now, with the new initiative, it allows corporates and individual businesses to report stablecoins more transparently on their balance sheets. It also strives to foster greater confidence and participation in the crypto market.
The Classification Continues in Project Crypto
This initiative is interim, which will be refined further in “Project Crypto.” SEC will shape the regulatory landscape of stablecoins by addressing barriers in the crypto space, such as redemption risk and transparency gaps.
Project Crypto also seeks to ensure the prevention of illicit use of stablecoins, signaling a continued evolution in stablecoin regulation.
