SEC's Senior Advisor for Digital Assets says stablecoins may be securities

16 Mar, 2019
by Richard Allen
SEC's Senior Advisor for Digital Assets says stablecoins may be securities

Senior Advisor for Digital Assets at the US Securities and Exchange Commission (SEC) Valerie Szczepanik told a crowd at SXSW conference that certain types of stablecoins “could raise issues under securities laws,” Decrypt reports.

Szczepanik broke stablecoins down into three categories: stablecoins “tied to some real asset, like real estate or gold and oil,” coins backed by fiat currency held in reserve, and a third category that could prove problematic under the current law, she explained.

Read more: Paxos to launch a stablecoin backed by precious metals "this year"

“I’ve seen stablecoins that purport to control price through some kind of pricing mechanism, whether it’s tied to the issuance, creation or redemption of another type of digital asset tied to it, or whether it is controlled through supply and demand in some way to keep the price within a certain band.”

It projects like these, “where there is one central party controlling the price fluctuation over time,” that “might be getting into the land of securities,” Szczepanik explained.

While admitting the SEC would have to “look at the facts and circumstances” of each individual stablecoin, it will be dependent on the expectations that stablecoin issuers convey on their buyers.

“You’re talking about folks who are buying into that ecosystem or are buying this coin with the expectation that somebody else is going to be holding a profit or guaranteeing a profit or holding the price at a certain level. Again, that could raise issues under securities laws.”

Read more: Stablecoins down in February, except Tether and DAI

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Read more about: Stablecoin SEC

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