The SEC approves certain stablecoins as cash equivalents, marking a major step toward integrating digital assets into mainstream financial systems.
In a significant development for the cryptocurrency sector, the U.S. Securities and Exchange Commission (SEC) has issued internal guidance allowing certain stablecoins to be treated as cash equivalents. According to Bloomberg Law, this ruling by the financial regulator has signaled a shift in the way the regulator will approach digital assets, particularly those backed by the U.S. dollar.
New SEC Guidance Excludes Algorithmic Stablecoins
The guidance allows that stablecoins that are backed completely by liquid, low-risk investments such as U.S. Treasury bills and are pegged to the dollar in a constant 1:1 ratio can now be considered cash equivalents. Such tokens should also give their holders the guarantee of redemption rights. The move adds much-needed clarity to institutions that were confused about how to classify such assets in financial statements.
Notably, this interim guidance does not cover algorithmic and yield-bearing stablecoins that are regarded as more volatile and less secure. The SEC is striving to enhance stability by protecting investors and financial institutions through the establishment of high eligibility criteria.
This ruling complies with the GENIUS Act that was passed into law in July 2025. The act provides a legal framework for regulated stablecoins and will distinguish them as a separate asset. It also specifies that stablecoin issuers should not only have proper reserves but also have open audits. This legislation strengthens the aspect of transparency, which will facilitate the use of stablecoins in accounting by companies.
With Chair Paul Atkins at the helm of the SEC, the agency has started shifting away from its prior policies, which were perceived to be limiting the entry into the digital asset sphere of traditional finance. The most recent advice falls within such a wider change in policy. Although it is not a permanent regulation, it gives a structured way of accounting for digital currencies until a complete regulatory framework is produced.
Related Reading: Deaton Says GENIUS Act Favors ETH, RLUSD, and USDC
Stablecoin Move Signals Regulatory Shift by SEC
Financial institutions are likely to benefit significantly from this update. When a stablecoin is classified as a cash equivalent, it makes the management of a balance sheet easier and mitigates compliance risk. Such transparency may entice the more conventional underwriters and companies to start looking at engagement in digital resources.
This move helps connect traditional finance with the growing world of cryptocurrencies. It shows that regulators are starting to value digital assets. The guidance is only temporary, but it can be taken as one of the steps in the right direction.
The market anticipates further regulatory news in the coming months, with the SEC still planning to clarify its position on digital assets. Currently, classifying some stablecoins the same way as cash contributes to clearing up the past market ambiguity.
Overall, the change is an optimistic, albeit tentative, step towards involving the blockchain-based assets in the official financial system. Even though there are numerous obstacles ahead, the new move taken by the SEC promises a greater presence of institutions as well as valuable innovations in the financial realm.
