SEC Allows USD-Backed Stablecoins as Cash Equivalents Under Interim Guidance
On August 5, the U.S. Securities and Exchange Commission issued interim guidance allowing USD-backed stablecoins to qualify as cash equivalents on corporate balance sheets. To qualify, stablecoins must maintain a strict 1:1 peg to the dollar, be fully reserved by cash or Treasury bills, and offer guaranteed redemption rights. Excluding algorithmic and yield-bearing tokens, this guidance aligns with the GENIUS Act’s reserve and audit mandates. It forms part of Chair Paul Atkins’s crypto reform package and is temporary pending Project Crypto rulemaking. By simplifying accounting and reporting, the SEC aims to boost institutional adoption of USD-backed stablecoins and integrate digital dollars into traditional finance. Key beneficiaries include Circle’s USDC and Tether’s USDT.
Bullish
In the short term, the SEC’s guidance reduces accounting hurdles for USD-backed stablecoins, likely prompting institutional treasurers to increase allocations to USDC and USDT as cash equivalents. This could boost transaction volumes and market liquidity. Over the long term, clearer regulatory treatment fosters broader corporate integration of digital dollars, enhancing demand and network effects. While stablecoins’ $1 peg remains intact, the improved institutional framework strengthens market confidence and adoption, making this development bullish for the stablecoin ecosystem and related liquidity providers.