- SEC Commissioner Caroline Crenshaw has criticized the regulator’s new stablecoin guidelines, claiming they understate risks and contain legal and factual errors.
- Under the new SEC guidance, certain stablecoins are now classified as “non-securities” and exempt from transaction reporting requirements.
- The crypto industry has largely welcomed the SEC’s decision, viewing it as progress despite some arguing it comes too late.
SEC Commissioner Caroline Crenshaw has spoken out against the regulator’s new stablecoin guidelines, claiming they misrepresent the market and downplay risks. In an April 4 statement, Crenshaw, known for opposing spot Bitcoin ETFs, argued that the SEC’s recent stablecoin position contained "legal and factual errors" that create a "distorted picture" of the USD-stablecoin market.
The contested SEC guidelines now classify stablecoins meeting certain criteria as "non-securities," exempting them from transaction reporting requirements. Crenshaw disputed the analysis behind this decision, challenging the SEC’s characterization of issuer actions "that supposedly stabilize price, ensure redeemability, and otherwise reduce risk."
Commissioner Challenges SEC’s Market Representation
Crenshaw specifically targeted the SEC’s claim that some USD-stablecoins are available to retail purchasers only through intermediaries. She argued this mischaracterizes the market reality, stating: "It is the general rule, not the exception, that these coins are available to the retail public only through intermediaries who sell them on the secondary market, such as crypto trading platforms." She emphasized that "over 90% of USD-stablecoins in circulation are distributed in this way."
The Commissioner also labeled as "grossly inaccurate" the SEC’s assurance that issuers can handle unlimited redemptions simply because reserves match or exceed supply value. "The issuer’s overall financial health and solvency cannot be judged by the value of its reserve, which tells us nothing about its liabilities, risk from proprietary financial activities, and so forth," she explained, adding that stablecoins always carry some risk, particularly in market downturns.
Industry Sees Progress Despite Commissioner’s Concerns
Despite Crenshaw’s criticisms, many crypto industry figures have welcomed the SEC’s decision. Token Metrics founder Ian Ballina said it "feels like a clear step in focusing on what really matters in the crypto space." Meanwhile, Vemanti CEO Tan Tran expressed that he wished the SEC had reached this point three years ago, while Midnight Network’s head of partnerships Ian Kane called it "progress for crypto folks trying to play by the rules."
The debate comes shortly after stablecoin issuer Tether reportedly began working with a Big Four accounting firm to audit its reserves. As reported by Cointelegraph on March 22, Tether CEO Paolo Ardoino suggested the audit process would be simpler under a pro-crypto U.S. administration.
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