Circle wants regulators to call stablecoins what the market already calls them: cash. The USDC issuer has asked the SEC to clarify that qualifying payment stablecoins count as “cash” under a proposed rule and to slash the broker-dealer capital haircut on those positions from 2% to zero – a request that landed in the public conversation this week as the sharpest test yet of how stablecoins as cash should be treated on paper, not just in practice.
What Circle Asked the SEC to Do
Circle filed its comment letter on October 20, the closing date of the comment period for SEC File No. S7-2026-27 – the SEC’s proposed Regulation Crypto Assets – and publicized the filing in the days that followed. The asks, in order of audacity:
- Clarify that qualifying payment stablecoins constitute “cash” for purposes of proposed Rule 302(b).
- Cut the current 2% broker-dealer haircut on qualifying payment-stablecoin positions to zero, subject to objective safeguards.
- Align the framework with the GENIUS Act and permit only GENIUS-compliant payment stablecoins as consideration or settlement assets.
- Give qualifying stablecoins dollar-based valuation, accounting and customer-reserve treatment.
- Separate the token being offered from the stablecoin used to pay for it – and treat validator maintenance as technical work.
Where the 2% Haircut Comes From
Today’s treatment is less formal than it sounds. In a February 19 staff FAQ, the SEC’s Division of Trading and Markets said it would not object if a broker-dealer treated a proprietary payment-stablecoin position as having a “ready market” under Exchange Act Rule 15c3-1 – provided the firm takes a 2% haircut for net capital purposes. Commissioner Hester Peirce marked the occasion with a speech titled “Cutting by Two Would Do,” noting some broker-dealers had proposed taking a 100% haircut instead. It is informal staff guidance, not a rule amendment – which is exactly why issuers want it nailed down.
Why It Matters
Regulation Crypto Assets, proposed on August 18, 2026, creates tailored offering exemptions, a principles-based disclosure regime and a conditional safe harbor from “investment contract” treatment. How it treats stablecoins at settlement determines whether crypto-native money is first-class plumbing or a second-class passenger. GENIUS Act-compliant stablecoins from permitted issuers are already non-securities by operation of statute – Circle’s letter is about pushing that logic through the SEC’s rulemaking rather than leaving it to staff memos.
Nothing is decided. The SEC has not adopted a zero-haircut or “cash” rule, and the comment period’s outcomes are pending. But with the Binance hack putting stablecoin freeze powers in the regulatory spotlight the same week, the politics of treating these tokens as cash just got more interesting – not less.
Related: OCC Finalizes GENIUS Act Stablecoin Rule With Jan 18 Deadline for Issuers
