SEC Shakes Up Crypto: Stablecoins Now Treated as Cash Equivalents in Landmark Rule Change

The SEC just dropped a regulatory bombshell—stablecoins are getting a cash-like makeover. No more regulatory limbo: Tether, USDC, and their peers now fall under the same umbrella as money market funds and commercial paper. Here’s why it matters.

### The Fine Print: What Changed?

The update slashes through years of ambiguity, classifying stablecoins as "cash equivalents" under securities law. Translation? Easier balance-sheet treatment for corporations—and a potential green light for institutional adoption.

### Wall Street’s Whisper: ‘Finally’

Hedge funds and treasury departments have been begging for this clarity. Now they can park crypto liquidity without triggering audit red flags. (Cue the collective sigh of relief from CFOs who’ve been juggling spreadsheets and regulatory risk.)

### The Cynic’s Corner

Of course, the SEC timed this right after banks started hoarding stablecoins for yield. Coincidence? Or just Wall Street’s latest regulatory arbitrage play? You decide.

Bottom line: The rulebooks are catching up to reality. Whether that’s good news or just creative accounting depends on who’s holding the bag.

Specific Accounting Details for Stablecoins

The new guidance stipulates two conditions for companies to classify U.S. dollar-pegged stablecoins as “cash-like assets” on their balance sheets. First, the issuer must guarantee redemption in U.S. dollars on demand. Second, the stablecoin’s value should be fully collateralized by another asset (usually cash or Treasury bonds). Meeting these conditions aligns with traditional cash management principles, streamlining financial reporting controls, and enhancing transparency for investors.

The guidance also offers a roadmap for auditing firms. Issuers with large reserve portfolios can report their asset items under securities available for sale rather than financing. This approach reduces liquidity risk and diminishes questions concerning amortization. The SEC highlighted that this application is temporary, and permanent standards will be issued after public feedback is collected.

The Broader Vision of SEC’s Cryptocurrency Regulation

The guidance advances in tandem with Project Crypto, an initiative introduced by Atkins last week. This project aims to establish modern rules that will transition the capital market to Blockchain, based on recommendations from the U.S. Presidential Working Group. While facilitating stablecoin transactions, the SEC plans to set clear boundaries within the cryptocurrency market. The primary objective is to create an innovation-friendly space for payment-focused stablecoins while regulating asset-like securities.

SEC Chairman Paul Atkins

Bernstein’s research team described the developments as an “unprecedented regulatory framework.” The analysis reveals that the U.S. is increasing its leadership opportunity in the global financial digital transformation with a clear, gradual, and technology-friendly approach. Consequently, banks and fintech companies will be able to establish institutional roadmaps for cryptocurrency integration more rapidly, while investors will gain access to new products within a regulated environment.