Senior Advisor for SEC: Some Stablecoins Violate Securities Laws

Senior Advisor for SEC: Some Stablecoins Violate Securities Laws

At the Austin SXSW conference last week, the senior advisor for the SEC Valerie Szczepanik spoke about stablecoins and how some may be violating securities law. In her speech, she outlined the different kinds of stablecoins and the regulatory questions still remaining.


Last Friday, the Austin SXSW conference was held. A mega-convention including tech, music, movies, and more was on the schedule. In the Blockchain & Cryptocurrency tract, thinkers, investors, policymakers, and other interested parties came to share ideas on the crypto space.

One of the speakers was the SEC’s senior advisor for digital assets Valerie Szczepanik who spoke about stablecoins. And she had a lot to say on the matter which may tell us about the SEC’s position on cryptocurrencies more generally, especially regarding security tokens.

The “Three Kinds of Stablecoins”

Szczepanik splits stablecoins into three major groups. Firstly, there are the real-world assets like gold, oil, and real estate which are tokenized. The second type are linked to actual fiat reserves, like the Gemini Dollar is. Third is the problem-area where stablecoins may be breaking securities laws.

This third category are those stablecoins which have a central authority controlling their price variations. Because they control supply and demand, Szczepanik said these stablecoins fall under securities law potentially. However, she also specified that each stablecoin will have to be scrutinized separately by the SEC.

Her comments are interesting given the fact that stablecoins are hot right now. There’s been so many announced projects in 2019 alone. Many analysts even predict that soon governments will have to issue their own stablecoins in due time as the tokenization economy becomes more and more mainstream.

Szczepanik also called out those in the cryptocurrency industry who try to “distort” their intentions by calling tokens what they aren’t, like utility tokens or stablecoins, but are actually using them for speculative value. She stressed that what crypto startups should be asking from the SEC is not forgiveness but instead authorization to be in business if they meet regulatory standards. Harsh words.

Yet, the reminder of the speech was quite optimistic. In her mind, a “crypto spring” is coming; she’s just telling us to be aware of these issues since they’re seldom discussed.

What do you think of Szczepanik’s remarks? Agree or disagree? Let us know your thoughts in the comments.


Image courtesy of ethereumworldnews.

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