A Democratic commissioner’s disapproval of the Securities and Exchange Commission’s statement that stablecoins are not securities could pose a challenge to lawmakers looking to pass stablecoin legislation, according to investment bank TD Cowen.
In a statement last week titled “‘Stable’ Coins or Risky Business?,'” SEC Commissioner Caroline Crenshaw blasted her colleagues’ assertion that stablecoins are not securities. That divide between Crenshaw and the SEC could be “another roadblock” for stablecoin legislation, TD Cowen’s Washington Research Group, led by Jaret Seiberg, said in a note on Monday.
“We still see it passing, but nothing is assured. And this fight seems poorly timed to us,” Seiberg said.
Ahead of the weekend, the SEC published a statement taking the position that stablecoins, backed by reserves and easily redeemable, were not securities. Crenshaw, the sole Democrat on the agency’s commission, pushed back and said the agency “drastically understates its risks.”
Stablecoins are available to retail investors only through an intermediary, and that intermediary does not have to “redeem a coin for $1 and will instead pay the holder the market price,” Crenshaw said.
“These legal and factual flaws in the staff’s statement do a real disservice to USD-stablecoin holders, and, given the central role of stablecoins in the crypto markets, to crypto investors more generally,” Crewshaw added.
The SEC’s statement comes as lawmakers are working swiftly on bills to regulate stablecoins. Over the past few weeks, committees in the House and Senate have advanced bills to regulate that set parameters around reserve requirements, among other standards for stablecoin issuers. Both versions are slightly different and would need to come to a consensus before going to President Donald Trump’s desk to sign.
Some Democrats, including top Democrat of the House Financial Services Committee Maxine Waters, D-Calif., have raised concerns over Trump’s involvement in crypto and others warning that the bills would allow companies and their executives, such as Tesla CEO and presidential advisor Elon Musk, to issue their own stablecoins.
A bill cannot pass the Senate without Democratic support, Seiberg said.
“With Congress so close to acting, it makes no sense for the SEC to issue guidance,” Seiberg said.
© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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