SEC Allows Certain Stablecoins to Be Treated as Cash Equivalents Under Strict Criteria.

The SEC has issued interim guidance allowing certain USD-backed stablecoins to be treated as cash equivalents on corporate balance sheets. The guidance applies to fully backed, redeemable tokens with a 1:1 peg to the US dollar, excluding algorithmic stablecoins and yield-bearing tokens. This move is seen as a reversal of the SEC's earlier policies and a step toward institutional access and regulatory clarity. The guidance is part of the SEC's "Project Crypto" initiative to clarify digital asset classification and improve disclosure standards.

The U.S. Securities and Exchange Commission (SEC) has issued interim guidance allowing certain U.S. dollar-backed stablecoins to be treated as cash equivalents on corporate balance sheets. This move is part of the SEC's broader initiative, known as "Project Crypto," aimed at modernizing cryptocurrency regulation and clarifying digital asset classification.

The guidance applies specifically to fully backed, redeemable tokens with a 1:1 peg to the U.S. dollar. These tokens must meet stringent criteria, including full backing by cash or Treasury bills, a consistent 1:1 peg to the U.S. dollar, and a guaranteed right to redemption. This classification excludes algorithmic stablecoins and yield-bearing tokens [1].

The SEC's decision is seen as a reversal of its earlier, more restrictive policies. By treating qualifying stablecoins as cash equivalents, the agency seeks to eliminate one of the main accounting hurdles that kept traditional financial institutions from participating in the cryptocurrency market. This designation may improve corporate reporting transparency and simplify how companies with crypto exposure manage their books [1].

The guidance complements the GENIUS Act, signed into law by President Trump in July 2023. The GENIUS Act requires reserve requirements and public audits for regulated stablecoins, acknowledging them as a new financial instrument that is neither a security nor a commodity. Firms like Circle (USDC) and Tether (USDT) now have a clearer regulatory path thanks to the law and the SEC's guidance [1].

However, questions remain about the future treatment of more complex or international stablecoin models. Some analysts warn that redemption risk, transparency gaps, and illicit usage remain unresolved. The SEC acknowledged that the guidance is temporary and that further rulemaking is likely as part of its ongoing "Project Crypto" initiative [1].

The interim guidance is a significant step toward formal recognition of digital dollars in U.S. financial reporting. While not a full rule change, it is seen as a meaningful step in the right direction. The move reflects a broader trend of regulatory shifts favoring institutional adoption of cryptocurrencies [2].

References:
[1] https://crypto.news/sec-treat-stablecoins-cash-equivalents-2025/
[2] https://www.ainvest.com/news/bullish-files-4-23-billion-ipo-policy-shifts-stablecoin-growth-2508/