As crypto matures, stablecoins are increasingly being used in real-world financial transactions – including private lending that looks a lot like a traditional mortgage or business loan. A common question we hear is whether lending stablecoins (such as United States Dollar Coin or “USDC”) raises SEC concerns. As of 2026, the short answer is generally no – at least for private, peer-to-peer transactions.
SEC Treatment: Stablecoins Are (Mostly) Not Securities
Under current federal guidance, properly structured stablecoins used for payment purposes are not treated as securities. In April 2025, the SEC issued a Staff Statement clarifying that “Covered Stablecoins” – those fully back 1:1 by U.S. dollars, non-interest-bearing, and used solely as a payment mechanism – do not qualify as securities. This position aligns with the anticipated framework of the proposed GENIUS Act, which would formally exempt payment stablecoins like USDC from securities regulation once enacted (expected rollout in 2026-2027).
As a result, an individual may loan stablecoins to another person and receive repayment in U.S. dollars or another digital asset without triggering SEC registration requirements, so long as the transaction is private and not part of a broader lending platform or investment product.
Taxes Are the Real Regulatory Hook
While SEC oversight is limited, the IRS is very involved. The IRS treats stablecoins as property – not currency – meaning nearly every stage of a loan has tax consequences:
- Repayment in USD is treated as a disposal of the stablecoin, potentially triggering capital gains or losses.
- Repayment in another cryptocurrency (e.g., lending USDC and receiving Bitcoin) is treated as a crypto-to-crypto exchange, with capital gains calculated at the time of receipt.
- Interest payments, whether in USD or crypto, are taxed as ordinary income.
Private lenders must self-report interest income and any dispositions of digital assets, typically on Schedule 1 (Form 1040) and Form 8949.
If you use a lending platform, they are now required to send you a Form 1099-DA, with a duplicate going straight to the IRS. While these forms currently focus on your total sales (gross proceeds), starting in 2026, they will also track your “cost basis” (what you originally paid) for each specific wallet. Essentially, the IRS is moving toward automated tracking, and the days of “estimating” your crypto gains are over.
Where the Line is Drawn
Importantly, the regulatory risk increases when lending activity becomes a business model rather than a private transaction. Platforms offering interest-bearing stablecoin products may still be treated by the SEC as issuing investment contracts, requiring registration and compliance with federal securities laws. In fact, the regulatory boundary isn’t just about ‘how much’ you lend, but ‘how’ you lend it. Under the 2026 interpretation of the GENIUS Act, as long as you aren’t acting as an ‘unregistered broker’ – meaning you aren’t facilitating loans for others or promoting a yield product to the public – you remain in the clear. The moment you offer your lending ‘services’ to the public, the SEC’s registration requirements (and the heavy fines associated with them) kick in.
Bottom Line
Private stablecoin lending is currently permissible under federal securities law, but it is not tax-free, nor regulation-free. Structure, scale, and purpose matter – and the shift from personal use to business activity can dramatically change the compliance landscape.
The compliance landscape for digital assets is moving faster than ever. If you are leveraging stable coins for private financing or business transactions, clear boundaries are your best defense against heavy fines and tax surprises.
At Cavitch Familo & Durkin, we can help bridge the gap between traditional corporate finance and the realities of the evolving regulatory landscape for digital assets. Contact us for more information.