There are three stablecoin categories, said Szczepanik. Some are backed by real assets like gold, some are backed by fiat money held in the issuer’s bank account, and some, like Dai, rely on more complicated mechanisms to maintain price stability.

Szczepanik didn’t say any of the categories were off the hook, but she went out of her way to single out the third one. Coins that rely on “some sort of pricing mechanism” to maintain their value, she said, may fall within the purview of the SEC, whose charge is to protect investors from fraud and scams. In particular, if a stablecoin has “some central party controlling the price fluctuation over time,” that “might be getting into the land of security,” Szczepanik said.

Back in December, the founders of an “algorithmic” stablecoin project called Basis, which had raised $133 million from high-profile venture capital firms, cited securities law as the reason for abruptly shutting it down. “Having to apply US securities regulation to the system had a serious negative impact on our ability to launch Basis,” they wrote. Though Dai works differently, and its adherents would argue that it is not at all centralized, Szczepanik’s description was broad enough to imply that it may not be immune from legal issues similar to those Basis faced.

It’s not only regulatory uncertainty that Dai faces. Can it really remain stable forever? Instead of fiat money, it uses Ether as collateral. That’s risky, since at any time the price of Ether could crash and bring the stablecoin down with it. Dai accounts for this by using a strategy of “overcollateralization”: for every $100 worth of Dai in circulation, the system is supposed to keep at least $150 worth of Ether locked up as collateral.

If the price of Ether falls below a certain threshold, a smart contract automatically sells the collateral in exchange for Dai, which it then takes out of circulation in order to retain a “safe ratio.” The MakerDao community, which includes holders of a second token called Maker, can also vote to adjust something called a stability fee, which is the cost of minting new Dai.

In recent weeks, the coin has struggled to keep its $1.00 peg, trading at prices as low as $0.96. In response, the community has now voted three times to increase the stability fee. The episode suggests that more important than the question of whether Dai is a security is the question of whether it is sustainable. And if it’s not, let’s hope we can find that out before it becomes part of the basis for a new global financial system.