SEC Commissioner Caroline Crenshaw has strongly criticized the agency's new stablecoin guidelines, arguing they contain serious legal and factual errors while understating market risks.
In a statement released on April 4, Crenshaw challenged the SEC's recent decision to classify certain stablecoins as "non-securities," which exempts them from transaction reporting requirements. She claimed this new guidance creates a "distorted picture" of the USD-stablecoin market.
The Commissioner specifically disputed the SEC's characterization of how stablecoins are distributed to retail investors. "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," Crenshaw stated, noting that over 90% of USD-stablecoins follow this distribution model.
She also rejected the SEC's position that matching reserves guarantee unlimited redemptions. "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.
Despite Crenshaw's objections, the crypto industry has largely welcomed the SEC's new stance. Token Metrics founder Ian Ballina called it "a clear step in focusing on what really matters in the crypto space." Vemanti CEO Tan Tran expressed that earlier guidance would have been beneficial, while Midnight Network's Ian Kane viewed it as progress for regulatory compliance.
The controversy emerges as major stablecoin issuer Tether reportedly begins working with a Big Four accounting firm to audit its reserves, suggesting evolving dynamics in the stablecoin sector's regulatory landscape.