USA Law and Practice Contributed by: Gregory Strong, Sarah W. Chen, Brian Farber and Amil Sumaiya Malik, Cahill Gordon & Reindel LLP
6. Payments and Stablecoins 6.1 Payments
mission laws, and AML obligations under the Bank Secrecy Act. Regulators have generally taken the position that the use of a DAO or other decentralised structure does not, in itself, remove an activity from the scope of applicable laws, particularly where there are identifi- able persons exercising control or deriving economic benefit. Enforcement actions involving DeFi protocols have also reflected a substance-over-form approach. See 5.3 Liability for more information. 5.3 Liability As mentioned in 5.2 DeFi Structures , regulators in the USA have taken the position that the use of smart contracts or DAO-based governance does not elimi- nate liability where there are identifiable persons or groups responsible for operating, controlling or ben- efiting from the protocol. This approach is reflected in enforcement actions brought by the CFTC. In CFTC v Ooki DAO , the CFTC brought an action against a DAO alleged to be operat- ing an unregistered derivatives trading platform. The court permitted the DAO to be treated as an unincor- porated association and allowed service of process through the DAO’s online governance forum. The court later entered default judgment against Ooki DAO. The case also reflects the CFTC’s view that participa- tion in DAO governance may, depending on the facts, give rise to liability where individuals are sufficiently involved in the operation of the protocol. In the civil litigation context, numerous class actions have been filed alleging that DAOs operate as gen- eral partnerships and seeking to hold significant DAO participants responsible for the activities of the DAO as general partners. For example, in Samuels v Lido DAO , et al in the Northern District of California, motion to dismiss was denied and the court found that the allegations in the complaint adequately alleged that the Lido DAO was a general partnership.
Digital assets may be used for payments in the USA. There are no digital asset-specific laws or rules in this area, and use and acceptance of digital assets for payment by merchants is subject to traditional laws and rules related to payments. Many digital asset pay- ment systems involve transmission of digital assets by an intermediary or conversion of digital assets to fiat or digital assets to other digital assets, all of which implicates US money transmission laws and rules. 6.2 Stablecoins 6.2.1 Fiat Currency and Algorithmic Stablecoins In April 2025, the SEC’s Division of Corporation Finance issued a statement clarifying how federal securities laws apply to certain “Covered Stable- coins”, defined as those: • pegged one-to-one to the US dollar; • redeemable one-for-one for US dollar; and • backed by low-risk, highly liquid reserves that meet or exceed their redemption value. In the statement, the SEC shared the view that the offer and sale of Covered Stablecoins, as described, generally do not involve the offer or sale of securi- ties under the Securities Act or the Exchange Act. To reach this conclusion, the SEC applied both the Reves test and the Howey test. Applying the “family resem- blance” test under Reves v Ernst & Young – a Supreme Court decision that determines when a “note” quali- fies as a “security” under federal securities laws – the SEC found that since Covered Stablecoins are not marketed for speculation, and are backed by risk- reducing reserves, they are unlikely to be securities. Similarly, under the Howey test, buyers of Covered Stablecoins do not have a reasonable expectation of profits derived from others’ efforts. Nonetheless, the statement emphasised that this analysis is lim- ited to the Covered Stablecoins described and does not apply to algorithmic stablecoins, non-US dollar pegged stablecoins, or yield-bearing stablecoins, and that each stablecoin must be assessed based on its own facts and circumstances.
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