In a major move that could reshape the regulatory future of cryptocurrency in the United States, the Securities and Exchange Commission (SEC) has clarified that certain stablecoins do not qualify as securities, providing long-awaited clarity to crypto firms, developers, and investors alike.

The statement was issued by the SEC’s Division of Corporate Finance and specifically refers to a class of tokens known as “Covered Stablecoins.” These are digital tokens that are:

• Pegged to the U.S. dollar on a 1:1 basis

• Redeemable at any time for the same value in USD

• Backed by low-risk, liquid assets in a reserve

• Not offering any yield or interest payments to users

The SEC said, “the offer and sale of Covered Stablecoins, in the manner and under the circumstances described in this statement, do not involve the offer and sale of securities.” This statement is significant because it reduces the regulatory risk for compliant stablecoin issuers and opens the path for more widespread and secure usage.

Why this matters: Stablecoin clarity fuels market confidence

Stablecoins have long sat in a regulatory grey area. Their utility in the crypto ecosystem is vast—from serving as a medium of exchange and collateral in DeFi to acting as a safe haven during volatile market conditions. However, the lack of clear regulatory guidance had stunted institutional adoption.

This recent clarification from the SEC is expected to:

• Boost investor and institutional confidence

• Encourage compliant issuers like Circle and Paxos

• Support the ongoing legislative efforts in Congress

The statement notably aligns with increasing optimism that Congress will pass its first crypto legislation this year, with a particular focus on stablecoins.

Interest Payments: The Regulatory Line in the Sand

One critical aspect the SEC emphasized is that covered stablecoins must not offer any interest or yield to holders. While the assets backing these stablecoins (like U.S. Treasury bills) may generate income for the issuer, none of that yield may be passed to the user—otherwise, the token would fall under securities regulations.

This rule has drawn criticism from industry leaders like Coinbase CEO Brian Armstrong, who stated on CNBC and social media that consumers should have the right to earn interest on their stablecoins. Armstrong argued that current SEC policy stifles innovation and could hurt U.S. competitiveness in the growing crypto financial sector.

Legislation in Progress: STABLE vs. GENIUS

Two significant bills are working their way through Congress:

1. STABLE Act – Passed by the House Financial Services Committee, this bill focuses on transparency, reserve backing, and federal oversight.

2. GENIUS Act – A Senate proposal led by Senators Tim Scott (R-SC) and Bill Hagerty (R-TN), this bill has also advanced through the Senate Banking Committee.

Both bills aim to regulate stablecoins by ensuring reserve transparency, redemption rights, and compliance oversight, while giving non-bank issuers a legal path to operate. President Donald Trump has expressed hope that legislation will reach his desk before the August recess.

Stablecoins Surge in Popularity

The stablecoin market has seen explosive growth:

• 47% increase in the past 12 months

• 11% increase in 2025 alone

• Top players include Tether (USDT) and USD Coin (USDC)

Their use extends beyond crypto exchanges—financial institutions, fintech firms, and cross-border payment services have all shown rising interest.

According to JPMorgan, yield-bearing stablecoins (which fall outside the SEC’s “covered” definition) have also ballooned post-election, reaching a $13 billion market cap, or 6% of the total stablecoin market.

Circle's IPO and the Push for Mainstream Adoption

Adding to the momentum, Circle, the issuer of USD Coin (USDC), has filed for an initial public offering (IPO). If successful, Circle would become one of the most high-profile crypto companies to go public, following Coinbase’s direct listing in 2021.

A public listing would signal:

• Investor confidence in regulated crypto products

• Institutional interest in fiat-pegged digital currencies

• An increase in scrutiny and transparency requirements for issuers

Circle’s move aligns well with the SEC’s recent clarification, as USDC meets all the covered stablecoin requirements. With backing from respected financial institutions and rigorous transparency reporting, USDC could become the model for future U.S.-compliant stablecoins.

The Bigger Picture: Crypto’s Legal Framework is Forming

This week’s announcement from the SEC marks another step toward regulatory certainty for digital assets. While many areas of crypto remain under legal scrutiny—such as yield farming, NFTs, and layer-2 tokens—the move to clearly exclude basic fiat-backed stablecoins from securities law represents progress.

It also lays the groundwork for:

• Institutional innovation and adoption in digital payments

• Retail access to secure, non-volatile digital dollars

• Legal frameworks for DeFi protocols using stablecoins as core components

The clear line between “covered” and “yield-bearing” stablecoins gives developers and investors a foundation to innovate within defined limits while pushing for future legislation that allows interest payments in a compliant way.

Conclusion: A Balanced Step Forward

The SEC’s clarification does not end the debate around crypto regulation—but it brings much-needed regulatory predictability to a crucial part of the ecosystem. Stablecoins, often dubbed the “killer app” of crypto, now have a clearer legal standing—at least in their basic form.

With ongoing legislative efforts, a surging stablecoin market, and IPO-level interest from major players like Circle, the future of regulated digital dollars in the U.S. seems closer than ever.

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The Upcoming IPOs in this week and coming weeks are Aten Papers & Foam.

The Closed IPOs are  Infonative Solutions Limited, Spinaroo Commercial Limited,Retaggio Industries Limited.