Circle urges SEC to treat qualifying payment stablecoins as cash, zero haircut

2 min

Circle outlined how payment stablecoins should fit within the SEC’s proposed crypto-asset framework, focusing on market plumbing such as consideration, settlement, and broker-dealer capital treatment. These are requests from an interested party and do not reflect Commission adoption.

Key requests and scope

Circle’s summary describes an October 20 comment letter seeking coordination between proposed Regulation Crypto Assets and the GENIUS Act, with clarity on using qualifying payment stablecoins as consideration and settlement assets. The letter asks for cash treatment under proposed Rule 302(b) and a reduction of the broker-dealer haircut for qualifying stablecoins from 2% to zero with safeguards. The SEC has not decided on these requests, and final rule text can diverge from issuer preferences.

Why the haircut matters

A regulatory haircut reduces the recognized value of an asset in capital calculations. Lowering that deduction can improve balance-sheet efficiency for intermediaries without changing the asset itself. The implications depend on which stablecoins qualify, what safeguards apply, and whether the treatment addresses risks tied to actual intermediary use. Circle’s detailed position is in the submitted letter.

Settlement assets in capital formation

Offerings require investors to deliver value, issuers to receive it, and intermediaries to record balances. The settlement instrument influences valuation, custody, and customer reserve requirements. Clear rules can reduce uncertainty, but favorable labels must not obscure the legal claim or redemption conditions underlying a stablecoin.

Technical maintenance boundary

Circle asks the SEC to distinguish ongoing technical maintenance on functioning networks from the managerial efforts that establish an investment proposition. Software requires repairs and upgrades after launch. A workable framework should account for such work without treating each update as equivalent to original issuer promises.

Status and next steps

The consultation record highlights practical issues that need resolution. The next material development would be an SEC action or revised proposal. Until then, claims that qualifying stablecoins already have zero-haircut or cash treatment under the proposal exceed the available evidence.