People do covers there all the time. In fact there is a even a genre for you to select called "cover(s)".
I would think if you plan to sell a cover on the site it's in your best interest to get a Harry Fox Agency license. I'm no expert but if you don't allow downloads or are not selling it I could
*imagine* there would be no trouble. You'll have to take the risk on your own.
Essentially you pay ~$15 per song for a one year license to "sell" something like 50, 250 or 500 (I honestly don't remember) in one year. I did it for about 4 or 5 covers and never sold one copy (nor did I really expect to).
When I post covers now I do it on my own site or soundcloud.com (I think they have the same "requirements") but I don't "allow
*" downloads. I'll take the risk, but I would not recommend it for anyone to do.
*Depending on delivery method to your browser or the site, you *may* actually have a buffered .mp3 in a temp file (or so I'm told
). There is no controlling that.