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Are stablecoins securities?
May 2026
With regulators scrambling to classify digital assets, stablecoins sit on a fault line between payments and securities. Karl Loomes unpacks the emerging token taxonomy and what it means for investors across Europe and the United States
Image: rabbit_1990/stock.adobe.com
Stablecoins have become a linchpin of the digital asset market. As they grow from retail payment rails to institutional settlement tokens, regulators must decide whether these instruments behave like cash, deposits or securities.
The answer matters because it dictates who may issue them, how they may be marketed, and what protections investors receive.
A wave of regulatory clarity is emerging on both sides of the Atlantic, yet the rules differ and some grey areas remain.
Token taxonomy and interpretive guidance
In March 2026 the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly published interpretive guidance that classifies crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.
Only digital securities are treated as securities under the federal securities laws; the guidance notes that the other categories, including stablecoins, could become securities if they are offered or sold with an expectation of profit. The agencies emphasised that the taxonomy complements, rather than replaces, forthcoming legislation such as the Digital Asset Market Clarity (CLARITY) Act.
Meanwhile, the GENIUS Act, enacted in July 2025, provides that payment stablecoins complying with its provisions will not be treated as securities. This carve‑out acknowledges their role as a medium of exchange and aims to avoid duplicative regulation under securities law.
However, the guidance cautions that other stablecoins — particularly those offering yield or structured as investment products — may still fall within securities definitions.
MiCA’s approach to stablecoins
The European Union’s Markets in Crypto‑Assets Regulation (MiCA) takes a different approach. Rather than treating stablecoins as securities, MiCA creates two regulated categories: electronic‑money tokens (EMTs), which are backed one‑to‑one by a single fiat currency; and asset‑referenced tokens (ARTs), which reference baskets of currencies or commodities.
Algorithmic or unbacked tokens may fall outside the ART/EMT categories unless they reference assets or an official currency, but they are not simply outside MiCA. Issuers of EMTs or ARTs must be authorised as credit institutions or e‑money institutions; they must publish regulator‑approved white papers, maintain appropriate reserve or safeguarded assets under MiCA’s prudential rules, segregate reserves with reputable custodians, guarantee redemption at par and, crucially, may not pay interest on holdings.
Significant issuers are subject to enhanced oversight by the European Banking Authority, and non‑euro stablecoin usage is capped to protect the euro’s monetary sovereignty.
Permitted issuers and reserve mandates under the GENIUS Act
The GENIUS Act is the United States’ first federal law to regulate payment stablecoins. It defines a payment stablecoin as a digital asset designed for payments and obliges issuers to redeem tokens for a fixed monetary value. Only “permitted payment stablecoin issuers” may issue such tokens; these include subsidiaries of insured depository institutions and federally or state‑chartered non‑banks. Issuers must maintain reserves in cash or cash equivalents on a one‑to‑one basis and are explicitly barred from paying yield or interest to token holders.
Under a proposed rule released in April 2026, the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control would treat stablecoin issuers as financial institutions under the Bank Secrecy Act and require them to implement robust anti‑money laundering and sanctions compliance programmes. The GENIUS framework thus positions payment stablecoins alongside banks in terms of prudential and compliance obligations while excluding them from securities law.
Investor protection and the securities question
For investors, the question of whether a stablecoin is a security goes beyond legal semantics; it determines what disclosures are required, what rights holders have and how regulatory protections apply. Under the SEC‑CFTC taxonomy, a stablecoin that is marketed as an investment or offers yield may be treated as a digital security and thus subject to prospectus obligations, ongoing reporting and investor protections. MiCA avoids this ambiguity by classifying EMTs and ARTs within a bespoke prudential regime, offering retail holders clear rights to redemption and forbidding interest to prevent depositor runs. In the US, the GENIUS Act’s ban on yield reflects similar concerns: policymakers worry that yield‑bearing stablecoins could siphon deposits from banks or resemble unregistered money‑market funds. At the same time, the act allows digital asset intermediaries to offer rewards, causing legislative friction that has stalled the CLARITY Act and its broader market‑structure provisions. Investors and issuers must therefore navigate not only the classification schemes but also the political compromises inherent in them.
The emerging frameworks show a convergence on key principles yet diverge on classification and supervision. Europe’s MiCA treats stablecoins as a new form of electronic money, subject to banking‑style prudential rules but outside securities law.
The US distinguishes payment stablecoins from investment products but leaves other stablecoins to the SEC’s case‑by‑case analysis. For institutional investors, these distinctions will affect due diligence, counterparty risk and the choice of settlement assets. As tokenisation continues to blur the lines between payments and investment, the question of when a stablecoin becomes a security will remain central to market development.
The answer matters because it dictates who may issue them, how they may be marketed, and what protections investors receive.
A wave of regulatory clarity is emerging on both sides of the Atlantic, yet the rules differ and some grey areas remain.
Token taxonomy and interpretive guidance
In March 2026 the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly published interpretive guidance that classifies crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.
Only digital securities are treated as securities under the federal securities laws; the guidance notes that the other categories, including stablecoins, could become securities if they are offered or sold with an expectation of profit. The agencies emphasised that the taxonomy complements, rather than replaces, forthcoming legislation such as the Digital Asset Market Clarity (CLARITY) Act.
Meanwhile, the GENIUS Act, enacted in July 2025, provides that payment stablecoins complying with its provisions will not be treated as securities. This carve‑out acknowledges their role as a medium of exchange and aims to avoid duplicative regulation under securities law.
However, the guidance cautions that other stablecoins — particularly those offering yield or structured as investment products — may still fall within securities definitions.
MiCA’s approach to stablecoins
The European Union’s Markets in Crypto‑Assets Regulation (MiCA) takes a different approach. Rather than treating stablecoins as securities, MiCA creates two regulated categories: electronic‑money tokens (EMTs), which are backed one‑to‑one by a single fiat currency; and asset‑referenced tokens (ARTs), which reference baskets of currencies or commodities.
Algorithmic or unbacked tokens may fall outside the ART/EMT categories unless they reference assets or an official currency, but they are not simply outside MiCA. Issuers of EMTs or ARTs must be authorised as credit institutions or e‑money institutions; they must publish regulator‑approved white papers, maintain appropriate reserve or safeguarded assets under MiCA’s prudential rules, segregate reserves with reputable custodians, guarantee redemption at par and, crucially, may not pay interest on holdings.
Significant issuers are subject to enhanced oversight by the European Banking Authority, and non‑euro stablecoin usage is capped to protect the euro’s monetary sovereignty.
Permitted issuers and reserve mandates under the GENIUS Act
The GENIUS Act is the United States’ first federal law to regulate payment stablecoins. It defines a payment stablecoin as a digital asset designed for payments and obliges issuers to redeem tokens for a fixed monetary value. Only “permitted payment stablecoin issuers” may issue such tokens; these include subsidiaries of insured depository institutions and federally or state‑chartered non‑banks. Issuers must maintain reserves in cash or cash equivalents on a one‑to‑one basis and are explicitly barred from paying yield or interest to token holders.
Under a proposed rule released in April 2026, the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control would treat stablecoin issuers as financial institutions under the Bank Secrecy Act and require them to implement robust anti‑money laundering and sanctions compliance programmes. The GENIUS framework thus positions payment stablecoins alongside banks in terms of prudential and compliance obligations while excluding them from securities law.
Investor protection and the securities question
For investors, the question of whether a stablecoin is a security goes beyond legal semantics; it determines what disclosures are required, what rights holders have and how regulatory protections apply. Under the SEC‑CFTC taxonomy, a stablecoin that is marketed as an investment or offers yield may be treated as a digital security and thus subject to prospectus obligations, ongoing reporting and investor protections. MiCA avoids this ambiguity by classifying EMTs and ARTs within a bespoke prudential regime, offering retail holders clear rights to redemption and forbidding interest to prevent depositor runs. In the US, the GENIUS Act’s ban on yield reflects similar concerns: policymakers worry that yield‑bearing stablecoins could siphon deposits from banks or resemble unregistered money‑market funds. At the same time, the act allows digital asset intermediaries to offer rewards, causing legislative friction that has stalled the CLARITY Act and its broader market‑structure provisions. Investors and issuers must therefore navigate not only the classification schemes but also the political compromises inherent in them.
The emerging frameworks show a convergence on key principles yet diverge on classification and supervision. Europe’s MiCA treats stablecoins as a new form of electronic money, subject to banking‑style prudential rules but outside securities law.
The US distinguishes payment stablecoins from investment products but leaves other stablecoins to the SEC’s case‑by‑case analysis. For institutional investors, these distinctions will affect due diligence, counterparty risk and the choice of settlement assets. As tokenisation continues to blur the lines between payments and investment, the question of when a stablecoin becomes a security will remain central to market development.
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