Stablecoins, Securities, and Sound Money: Where MLRT Fits on the Spectrum

Source reviewed: SEC Division of Corporation Finance — "Statement on Stablecoins" (April 4, 2025).

In April 2025, the staff of the SEC's Division of Corporation Finance issued a statement saying that a defined class of "covered stablecoins" — fully reserved, redeemable one-for-one for US dollars, marketed for use in commerce rather than as investments — are not securities under federal securities law.

That statement is interesting in its own right. It is also instructive for what it implies about other crypto assets that share some of the same structural properties but stand on different ground. Malairt (MLRT), a Bitcoin-style proof-of-work coin with a fixed monetary policy and no foundation, is on different ground than a stablecoin. But the principles the staff used to reason about stablecoins illuminate where MLRT sits.

What the staff actually concluded

The April 2025 statement applies to "covered stablecoins" — a tightly defined category:

• Designed to maintain a 1:1 value with the US dollar.
• Redeemable for USD on a 1:1 basis on demand.
• Backed by a reserve of low-risk, readily liquid assets that meets or exceeds the redemption value of the stablecoins in circulation.
• Marketed for use in commerce — payments, money transmission, store of value — and not as investments.

The staff applied the Reves framework (the relevant test for note-like instruments) and concluded that covered stablecoins are not securities for several reasons:

1. The seller uses proceeds to fund the reserve. Buyers are not motivated by an expected return on their funds.
2. Distribution is not designed to encourage trading for speculation.
3. A reasonable buyer would not expect the stablecoin to be an investment.
4. The reserve, properly funded, is a risk-reducing feature that distinguishes a covered stablecoin from a speculative note.

Crucially, the statement does not extend to algorithmic stablecoins that rely on variable reserves to maintain value. The staff was careful to draw the line.

What this tells us about the agency's reasoning

Strip away the Reves mechanics for a moment. The core argument the staff made is functional: the question of whether something is a security depends on whether buyers are buying it as an investment with the expectation of profit derived from someone else's efforts. A covered stablecoin fails that test because nobody buys USDC to get rich. They buy it to spend it.

That functional reasoning is important. It's the same reasoning that pulls genuinely commodity-like crypto assets out of the securities bucket — even though the specific test that applies to them is Howey, not Reves.

How MLRT differs from a stablecoin

Before drawing analogies, the differences need to be honest:

• MLRT is not pegged. Its market price floats. There is no reserve, because nothing is being redeemed for anything.
• MLRT has no issuer. A stablecoin has an entity that mints, redeems, and manages a reserve. MLRT has no such entity. Coins enter circulation through proof-of-work block rewards, not through a corporate balance-sheet operation.
• MLRT is mined, not minted. A miner running malairte-node produces blocks; the protocol issues the subsidy.
• MLRT supply is finite and deterministic. 50 MLRT initial subsidy, halving every 210,000 blocks. There is no policy lever to expand or contract supply in response to demand.

So MLRT is not a stablecoin. The right analogy is not USDC. The right analogy is sound money with no central manager.

Where the same reasoning lands MLRT

Where the stablecoin analysis is useful is in the agency's willingness to look at the actual function of an asset and reason from there. Apply the same lens to MLRT:

• Is MLRT marketed as an investment by a promoter? No. There is no promoter. There is open-source software and a network that anyone can join.
• Is MLRT bought primarily as a claim on someone's enterprise? No. There is no enterprise. There is a protocol.
• Are MLRT holders depending on the entrepreneurial efforts of others for return? No. The protocol's behavior is determined by code and by independent miners and node operators acting in their own interest.
• Is the structure designed to reward speculation specifically? No. The structure is designed to issue coins to miners as a reward for protocol work and to settle peer-to-peer transactions.

These are the Howey prongs, not the Reves prongs, but the underlying instinct — look at what the asset functionally is, not at the label on the box — is the same instinct the staff used in the stablecoin statement.

A spectrum, not a binary

It is useful to think of crypto assets on a spectrum from "obviously a security" to "obviously not a security":

The April 2025 stablecoin statement was the agency confirming the fourth row. The 2025 SEC speech program — Peirce's "New Paradigm," Atkins's Project Crypto and Inside Project Crypto, the March 2025 mining statement — has been, collectively, the agency working its way toward confirming the fifth.

MLRT was built for the fifth row.

Sound money in a regulatory frame

There is a deeper point worth surfacing. A covered stablecoin and a born-mined commodity coin are doing two different jobs in the monetary system:

• A covered stablecoin is a useful payment rail for an existing currency. It moves dollars over the internet faster and cheaper than legacy systems. It depends on a reserve and an issuer.
• A commodity coin like MLRT is an attempt at sound money: a fixed-supply, protocol-issued asset that nobody can inflate by decree. It depends on the protocol and the miners.

Both can exist without being securities. The April 2025 statement is the staff acknowledging the first. The broader 2025–2026 SEC posture is increasingly acknowledging the second.

What this means for MLRT users

• MLRT is not a stablecoin. Don't confuse the two. MLRT's price is not pegged; there is no reserve.
• The same functional reasoning that pulls covered stablecoins out of the securities bucket applies, with different mechanics, to a born-mined commodity coin. MLRT is not bought as a claim on a promoter's enterprise; it is mined and held as a protocol-distributed asset.
• Sound-money positioning matters. MLRT's fixed monetary policy is a feature for users who want a non-discretionary asset.
• Tax law still applies. Mining income is taxable; gains and losses are real.

References

• Statement on Stablecoins — SEC Division of Corporation Finance (staff), 2025-04-04

This article is editorial commentary published by the Malairte project. It is not legal or investment advice and does not represent the views of the U.S. Securities and Exchange Commission or any of its staff or commissioners.