Circle has urged the U.S. Securities and Exchange Commission (SEC) to treat qualifying payment stablecoins as cash equivalents. The request was submitted in a comment letter dated October 20 and published on October 28, responding to a draft fundraising framework titled Regulation Crypto Assets.
The USDC issuer called on regulators to slash capital deductions (capital haircut) for broker-dealers from 2% to zero percent for qualifying payment stablecoin positions. The proposal seeks to revise SEC staff guidance dated February 19 regarding Rule 15c3-1. That earlier guidance was supported by SEC Commissioner Hester Peirce to help broker-dealers process tokenized securities more smoothly.
Alignment with Fundraising Rules
Circle asked the SEC to align settlement (settlement) and legal payment provisions with the GENIUS Act. Under this proposal, only GENIUS Act-compliant stablecoins would qualify as settlement assets.
The company also proposed that dollar tokens redeemable 1:1 be valued at full face value when calculated toward securities offering caps submitted to the SEC. This provision directly ties into the regulator’s fundraising limit options.
In a proposal released on August 18, the SEC outlined two offering exemption options for fundraisers. The first option caps offerings at $5 million over a four-year period. The second option allows a ceiling of up to $75 million within a 12-month period, accompanied by periodic reporting requirements and financial statements.
Limits on Issuer and Validator Liability
Circle’s letter called for a clear separation between the securities instruments being offered and the stablecoins used as a means of payment. This boundary was proposed to ensure stablecoin issuers are not automatically drawn into the legal liabilities of fundraising issuers.
At the network infrastructure level, Circle urged regulators to clarify that post-launch validator maintenance on a functional blockchain network does not constitute active managerial efforts. This clarity is needed so that developers’ code upgrade roadmaps are not jeopardized by investment contract classifications.
For broker-dealers and tokenized securities participants, the SEC’s decision on this proposal will determine the amount of capital reserves required during transactions. Reducing the haircut to zero percent would eliminate double-capital burdens when processing digital assets using dollar stablecoins.
Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
