Coinbase CEO responds to SEC's Stablecoin regulations clarity

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In a vital move for the crypto industry, the Securities and Exchange Commission (SEC) issued guidance on stubcoin, bringing new clarity to the fast-growing segment of the digital asset market.

The SEC Corporation Finance division issued a statement Friday, providing an opinion on the “Stablecoin” asset class as part of an effort to make the federal securities law more clear to Cryptocurrencies.

The stubcoin in the context of the statement is designed to maintain a stable value compared to USD and can be redeemed for USD on a one-to-one basis. They are backed by assets held in reserves that are considered low risk and easily liquid, with USD values that meet or exceed the ridiculous redemption value in circulation. This is called a “covered stub coin.”

“It is the division’s view that, under the methods and circumstances stated in this statement, the provision and sale of covered stubcoins is not accompanied by the offer and sale of securities,” according to the SEC.

Coinbase CEO responds

In response to the latest moves in the SEC, Coinbase CEO Brian Armstrong posted to X, saying “a very useful explanation.” The SEC clarification occurs when Crypto’s Stablecoin sector grows this year in anticipation of cryptography that may be focused on Stablecoins.

However, the STABLECOIN definition of SEC prohibits the issuer from paying interest to the user, as the issuer will cause the issuer to submit to the securities law.

This is a topic that Coinbase co-founders look forward to. Earlier this week on CNBC, Armstrong expressed concern about the idea that consumers will not be able to gain interest in Stablecoins.

In a tweet this week, Armstrong said that US Stablecoin laws should allow consumers to earn interest through Stablecoins, and that interest earned from reserve assets should be paid directly to Stablecoin holders. The technology already exists, but the law has not kept up, and Stablecoins currently cannot enjoy the exemption that the securities law allows issuers to pay interest to users.