Circle seeks cash treatment
Circle’s letter responds to the SEC’s proposed Regulation Crypto Assets, which would establish a new framework for companies raising capital through certain cryptocurrency offerings.
The proposal introduces two exemptions from traditional securities registration requirements. One would let companies raise up to $5 million over four years, while another would allow offerings of up to $75 million annually, subject to disclosure and other requirements.
Circle supports the framework but wants regulators to clarify that payment stablecoins issued under the $GENIUS Act’s regulatory standards qualify as cash when investors participate in these offerings.
The current proposal already allows permitted stablecoins to count toward the total amount raised. However, Circle argues that the SEC should go further by allowing issuers receiving those tokens to use the same procedures available when investors contribute conventional cash.
Without that clarification, companies could face different regulatory requirements depending on whether investors pay through bank transfers or blockchain-based dollar tokens.
Circle also wants qualifying dollar stablecoins that remain redeemable one-for-one to be valued at their corresponding dollar amount. This would avoid additional valuation requirements solely because payments occur on a blockchain.
The company further argues that accepting stablecoins as payment should not automatically subject those tokens or their issuers to the securities obligations governing the assets being sold.
These requests build on the $GENIUS Act, which established a federal framework covering stablecoin issuance, reserves, redemption, and supervision.
The Office of the Comptroller of the Currency (OCC) finalized its implementing rules, and the legislation and regulations are scheduled to take effect on Jan. 18, 2027.
Circle believes those safeguards provide a basis for regulators to recognize compliant stablecoins as payment and settlement instruments across financial markets.
However, the law’s issuer requirements do not automatically establish how stablecoins should be treated under every securities rule. Circle is seeking additional SEC recognition to address those separate requirements.
Wall Street expansion
Beyond crypto fundraising, Circle is pursuing changes that could make stablecoins more attractive to Wall Street broker-dealers.
The most consequential proposal concerns how securities firms calculate their regulatory capital, which determines their financial capacity to support trading activities and absorb potential losses.
Under SEC staff guidance updated in February, broker-dealers can apply a 2% haircut to qualifying stablecoin positions held for their own accounts when calculating net capital.
That deduction reduces the value recognized for regulatory purposes. For example, a broker with a qualifying $1 billion proprietary position would face a $20 million reduction in calculated net capital under the 2% treatment.
Circle wants to eliminate the deduction for payment stablecoins that meet the $GENIUS Act’s requirements.
The company argues that the law’s reserve, redemption, liquidity, and consumer protection standards justify treating compliant stablecoins more favorably than other digital assets.
Removing the haircut could free up regulatory capital for broker-dealers holding substantial stablecoin positions, potentially making those assets more attractive for institutional operations.
However, the existing 2% treatment comes from nonbinding SEC staff guidance rather than a Commission rule. A zero haircut would require further regulatory acceptance, and the actual benefits would depend on how much stablecoin inventory brokers hold.
Circle is also seeking a separate change to the SEC’s customer protection requirements.
Under Rule 15c3-3, broker-dealers must maintain qualifying assets in reserve accounts to protect customer funds. These requirements currently contemplate cash and qualified securities.
Circle wants the SEC to clarify whether compliant payment stablecoins can satisfy those obligations, potentially allowing firms to maintain part of their required customer reserves using digital dollars.
Such recognition could create another institutional use for $USDC, although it would require separate regulatory action and safeguards.
