New SEC guidance hands victory to World Liberty Financial and USD1
New SEC guidance
In a pivotal move that reshapes the regulatory landscape for digital currencies, the U.S. Securities and Exchange Commission (SEC) has issued new guidance that could prove decisive for World Liberty Financial and its flagship stablecoin, USD1—a project closely tied to President Donald Trump and his family.
The SEC’s Division of Corporation Finance introduced the term “Covered Stablecoins” in updated guidance released Monday, according to the Cryptopolitan.
These are tokens that maintain a one-to-one peg with the U.S. dollar, are fully backed by liquid, low-risk assets, and offer on-demand redemption. According to the agency, such coins do not qualify as securities, sidestepping the traditional regulatory frameworks that have ensnared other crypto assets.
SEC excludes Covered Stablecoins from securities law
The Commission’s rationale hinges on the notion that buyers of Covered Stablecoins are not seeking profits but are instead using them as digital cash equivalents. Under both the Reves and Howey tests—two key legal standards for determining securities—the SEC concluded that these instruments do not represent investment contracts.
“Buyers are motivated by a desire to use or consume the item purchased,” the guidance states, adding that such transactions fall outside the scope of federal securities laws.
USD1, launched in October by World Liberty Financial, now stands to benefit enormously. The company has raised $550 million through two public token offerings, drawing over 85,000 verified participants and high-profile investors such as Tron founder Justin Sun.
With the new classification, USD1 avoids the compliance burdens that have hindered other crypto projects, solidifying its position as a legal and functional tool for digital dollar transactions.
Meanwhile, the U.S. Securities and Exchange Commission (SEC) has recently instituted a significant procedural shift that requires its enforcement staff to seek approval from the Commission before formally launching investigations.
