Valerie Szczepanik, a senior advisor for digital assets at the United States Securities and Exchange Commission (SEC), pointed out that stablecoins could have a hard time under the current securities laws according to the information coming to our crypto news by the blockchain-related website Decrypt.
Szczepanik, popularly known as the Crypto Czar, has officially been appointed as the new associate director of the Divison of Corporation Finance and senior advisor for Digital Assets and Innovation or Bill Hinman who is the division director, back in June 2018.
When she made her statement regarding the stablecoins, she also divided them into three categories. The first category is the one related to real assets such as gold, the second one is the stablecoins related to fiat currency held in reserves and the third ones are the ones who use market mechanisms to keep the prices stable. She continued:
“I’ve seen stablecoins that purport to control price through some kind of pricing mechanism, whether it’s tied to the issuance, creation or redemption of another type of digital asset tied to it, or whether it is controlled through supply and demand in some way to keep the price within a certain band.”
Valerie also noted that when a third central party controls how the prices move over time, the last type of stablecoins ‘’might be getting into the land of securities.’’ Also, she believes that if the buyers are promised that someone else will guarantee a profit or that is able to control the price, that token could be considered as security.
Finally, she explained that when an asset is labeled as a stablecoin, the SEC will always have their eye on such projects with a high level of scrutiny. She noted:
“Not to sound cliche, but we’d much rather people come to us and ask for [permission], or come talk to us before they do something, rather than doing something and then coming in and asking for forgiveness.”
For example, the United States-based stablecoin project Basis, stated last December that they will close all operations and all of the investors will get their money back since they weren’t able to avoid a security classification for their secondary token.
In the meantime, Jay Clayton, SEC’s chairman, confirmed that Ethereum and other similar cryptocurrencies are not classified as securities under the US law.
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