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The U.S. Securities and Exchange Commission’s clarification about the nonsecurity status of covered stablecoins allows businesses utilizing them to operate without the stringent regulations applied to securities.
SEC Clarification: Big Win for Crypto
On April 4, the United States Securities and Exchange Commission (SEC) provided some much-needed clarity to the federal securities laws on crypto assets. In the statement issued by the Commission, its Division of Corporation Finance asserted that certain stablecoins, referred to as covered stablecoins, are not securities. These covered stablecoins are crypto assets used for making payments, storing value, or transmitting money with a stable value relative to USD and backed by the USD or other low-risk assets. These stablecoins are readily liquid and can be used to honor commitments on demand.
In summary, the SEC’s statement determines that these covered stablecoins are not securities and, therefore, do not fall under the regulations of the other securities.
Stablecoins are not securities, and this confirmation by the SEC is a big win for the sector. Cryptocurrencies have long been misunderstood, with different perspectives playing a role in their acceptance.
Stablecoins, like USDT and USDC, do not fall under the broad classification of securities that was used earlier to qualify all cryptocurrencies. Nobody really buys stablecoins with the aim of making profits from them, like other cryptocurrencies. With this clarification, businesses using stablecoins to aid global payments and remittances, like Flincap, a Nigerian stablecoins-powered payments platform, can conduct business outside of the strict rules placed on securities.
On the heels of this statement is the passing of the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act by the U.S. House Financial Services Committee. This law provides a comprehensive regulatory framework. The GENIUS Act, similar to the STABLE Act, has also gotten bipartisan approval in the U.S> Senate. While the GENIUS and STABLE Acts are similar, there are certain differences in their approach. Many industry players hope that there will be a reconciliation of both acts before the bills reach the House and Senate floors.
Whatever the verdict for these two acts, the statement by the US SEC is enough endorsement for individuals, businesses, and industry leaders who have an interest in stablecoins. With the clarification of the difference between stablecoins and other crypto assets, proper structure and regulation can begin to occur in the stablecoin sector. Regulations, accountability, and proper structure are important for true financial innovation to bloom in the growing stablecoin sector.
Stablecoins Enable Easier Global Transactions for African Businesses
Stablecoins are making it possible for African businesses to do global transactions with ease. These crypto assets are the future of financial transactions, and these regulations are just the guardrails needed to protect users of stablecoins. Not only will individuals using the coins benefit, but also businesses are already using them to facilitate transactions.
The SEC’s statement, coupled with the regulatory acts in the pipeline, is proof of the promising future of global transactions using stablecoins. These new developments open the stablecoin market for new players who would want to use the power of these digital currencies to facilitate financial innovation and growth. More businesses and startups need to look into using stablecoins to facilitate their transactions.
Just as the US started with the STABLE and GENIUS Acts, financial regulatory bodies in Nigeria and other countries in Africa must begin to have separate regulations for stablecoins. We need to have stablecoin regulations that are different from the regulations for other cryptocurrencies. With proper regulations, anti-money laundering (AML) and capital requirements, businesses can use stablecoins safely without encountering systemic risks.
At Flincap, we are enabling borderless payments using stablecoins and AI. Stablecoins can be tools of inclusion, stability, and efficiency in global finance, and these new developments just prove that. The future powered by stablecoins is here. We are calling on other businesses, startups, regulatory bodies, and key industry players to join in building this compliant, reliable, and borderless payment infrastructure.
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