The Corporate Finance Division of the U.S. Securities and Exchange Commission (SEC) has outlined specific criteria under which certain stablecoins are not classified as securities.

According to the statement, digital assets that are designed and sold solely for use as a means of payment, money transfer, or value storage, and not intended for investment purposes, do not fall under the definition of securities.

“The Division believes that the offer and sale of such stablecoins, under the terms and circumstances described in this statement, do not constitute the offer and sale of securities,” the document states.

These stablecoins, as outlined, are meant to maintain a stable value relative to the U.S. dollar and must be backed by U.S. dollars and/or other assets considered to be low-risk and highly liquid. The reserves must match or exceed the total supply of the stablecoins in circulation. Issuers are expected to mint and redeem these tokens on demand and without quantity limitations.

Secondary market trading and intermediary involvement are permitted, but the stablecoins must not provide holders with any rights to dividends or ownership interests in the issuing entity or its business.

The use of crypto assets or precious metals as collateral is prohibited, which could present a challenge for Tether’s USDT in the U.S. market. However, Tether CEO Paolo Ardoino stated that such a restriction would not be an issue and that the company is ready to launch a new compliant product specifically for the American market if necessary.

Previously, the SEC also clarified that mining activities using the Proof-of-Work consensus mechanism are not associated with the issuance of securities.