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On April 4, 2025, the Securities and Exchange Commission issued a notice following the announcement by World Liberty Financial regarding the launch of Wall Stablecoin USD1, Wall Street was worth $6.4 trillion in what calls the bear market. The notice paved the way for a more regulated, stable digital assets landscape, saying that “covered stub coins” or tokens and US dollars and redeemable 1:1 are “unsafe.” Additionally, anyone involved in the process of “mint” (or making) and redemption of eligible stubcoins will be exempt from reporting requirements.
The SEC Notice provides examples of liquid assets readily including demand deposits with banks or other financial institutions registered in Section 8(a) of the Investment Companies Act of 1940, US Treasury securities and/or metals or other crypto assets, including cash equivalents in US dollars, bank demand deposits, US Treasury securities and/or monetary assets. The eligible Stablecoin issuer cannot conspire with the operating capital and asset reserves or provide the token holders with the opportunity for interest, profit or yield. Furthermore, eligible Stablecoin issuers must not use reserves for investments or market speculation.
The targeted stubcoins do not include stubcoins from the algorithm that maintains USD PEG using software or automated trading strategies, ensuring the adjustment state of the algorithm stubcoins, synthetic dollars, and yielding fiat tokens.
In the US, industry leaders are seeking regulatory changes that allow Stablecoin publishers to share yield opportunities and provide interest with Stablecoin holders. The first such a ridiculous stubcoin supporting the interest was approved by the SEC and registered as US security a month ago. “We are pleased to announce that Tim Bailey, Vice President of Global Business and Operations,” said Red Dating Technology.
“There is a market demand for stubcoins backed by government-regulated FIAT, and we believe this will help unleash the next wave of financial services innovation. Our UDPN Stablecoin Management System is ideal to help regulated Stablecoin issuers build and operate these new services.”
Another company, M^0, has built a programmable Stablecoin platform using Solana, allowing builders to launch feature-rich branded digital dollars on one of the industry’s most scalable blockchains by offering digital doll building blocks without the need for programmable contracts. As explained by Joao Reginatto, Chief Strategy Officer of M^0,
“Solana’s unparalleled speed, scalability and developer ecosystem will become the main environment for Stablecoin innovation. By bringing the M^0 platform to Solana, it can perform at any scale, not just for operational, liquid, liquid, and use cases. Developers.”
Stubcoin as a safe haven investment
Surprisingly, during the stock market blood bath, the US dollar weakened against the safe have Swiss franc as concerns about the global recession grew following the announcement that the US president would clean up tariffs on its trading partners. The announcement raises questions about the unofficial status of the US dollar as a global reserve currency due to its relative stability compared to other currencies. Furthermore, gold prices fell instead of rising as investors didn’t seek gold, a safe asset to maintain their wealth.
Instead, investors turned to Stablecoins (USDT), led by Tether (USDT) for $144 billion. The cryptocurrency market’s market capitalization fell by 18%, but the Stablecoin sector was relatively resilient, according to the financial giant. Stablecoins’ total market capitalization has skyrocketed above $230 billion, up 56% compared to the previous year, surpassing Bitcoin (BTC) price trajectory, suggesting an increase in demand for stable ships as a safe haven asset amidst the stock market slump, making SEC’s Stablecoin advice very appropriate.
William Quigley, co-founder of Wax and Tether, revealed in an interview with me that during the market slump, they may buy tethers as a safe port and slightly exceed the price. This behavior reflects the inside and outside of traditional currency trading. This determines the value rather than the fixed pegs of economic power. USDT is not fixed in US dollars. “The tether does not have pegs. They do not maintain pegs.” The term “peg” refers to the strict one-to-one price ratio that is always enforced. This is a concept that tethers do not adhere to. Instead, the tethers can be redeemed for $1. This means you can exchange it for $1, but the price can fluctuate in the market based on supply and demand dynamics.
