Circle asks the SEC to cut the 2% broker-dealer haircut on stablecoins to zero, but the 2% is staff guidance and the SEC has not replied

Circle, the issuer of USDC, has asked the US Securities and Exchange Commission to cut the SEC stablecoin haircut for broker-dealers from 2% to zero for payment stablecoins that comply with the GENIUS Act. The request sits in a five-page comment letter dated 20 October 2026 on the SEC’s proposed Regulation Crypto Assets, which Circle announced in a blog post on 28 October. The letter also asks for a rule amendment on how qualifying stablecoins are treated in the reserve account that brokers keep for customer money.

The 2% figure is not a Commission rule. It comes from a staff answer published by the SEC’s Division of Trading and Markets on 19 February 2026, which says the staff will not object if a broker-dealer applies a 2% haircut to its own stablecoin holdings when it calculates net capital under Exchange Act Rule 15c3-1. On a $1 billion position, that is $20 million less capital on paper.

The SEC has not answered Circle and has published no proposal to change the haircut. Circle is also not a neutral party: a zero haircut would make USDC cheaper for brokers to hold. The letter is signed by two of its deputy general counsels, Christine Parker and Corey Then.

What the SEC stablecoin haircut is, and why it is 2%

Broker-dealers registered with the SEC must keep a minimum amount of liquid net capital at all times, so that they can wind down without leaving customers short. When a firm adds up that capital, Rule 15c3-1 makes it shrink each asset by a percentage, the “haircut”, that reflects how much the asset could lose in a forced sale. Cash counts in full. Shares lose a large slice. An asset with no “ready market” loses everything.

Until this year, the rule said nothing about stablecoins. In a statement on 19 February, Commissioner Hester Peirce wrote that some broker-dealers, “out of an abundance of caution”, had proposed to take a 100% haircut, which in her view would be “unnecessarily punitive” given that the reserves behind payment stablecoins are generally dollars, short-term Treasury securities and similar instruments.

The staff answer released that day, question 5 of the Trading and Markets FAQ on crypto asset activities, set a middle path. Coindaro read the FAQ page on 29 October. It says the staff will not object if a broker-dealer treats a proprietary position in payment stablecoin as having a “ready market” and takes a haircut of 2% of the market value of the greater of the long or the short position. Because the test is the greater of the two, a firm cannot net its long and short positions.

Peirce tied the number to money market funds, which already take a 2% haircut and hold the same kind of instruments as stablecoin issuers. Staff answers, the FAQ says, have no legal force.

Which stablecoins qualify for the 2%

The FAQ’s footnote sets two definitions. Before the GENIUS Act takes effect, a payment stablecoin must be denominated in US dollars and issued by a state-regulated money transmitter, a state-regulated trust company or a national trust bank. It must hold reserves that meet the GENIUS Act standard, publish its redemption policy and publish a monthly attestation on its reserves by a registered public accounting firm. Once the Act applies, the stablecoin must be issued by a permitted payment stablecoin issuer or a foreign issuer that complies with the Act.

In dollars: $20 million of capital per $1 billion of stablecoins

The arithmetic is simple, and it is the reason brokers care. The table shows how much of a proprietary stablecoin position counts towards net capital under the three treatments at stake. The figures are a Coindaro calculation; CryptoSlate, which reported the letter on 29 October, gives the same $20 million example.

For a broker that had planned the 100% haircut Peirce mentioned, the February answer put back $980 million of capital on every billion held. Circle’s request is about the last $20 million. How much that matters across Wall Street depends on how many stablecoins brokers actually hold for their own account, a figure no public source tallies.

Circle’s case: a payment stablecoin is not a money market fund

Circle calls the staff FAQ “a constructive interim step”, then attacks the analogy behind it. Money market funds, the letter argues, are investment products whose holders seek returns and carry portfolio, liquidity and net asset value risk. A stablecoin issued under the GENIUS Act, in Circle’s words, is “designed and supervised solely for payments and settlement”.

The company lists what comes with that status: 1:1 reserves, capital and liquidity standards, redemption at par, bankruptcy protections and legal rights for holders. From there it asks the Commission to “reduce the Rule 15c3-1 haircut to zero for GENIUS-compliant payment stablecoins”. That would put them in line, the letter says, “with other cash-like assets”.

Circle wants the zero to rest on criteria rather than on a name. The letter cites the law’s requirements on redemption, reserve quality and liquidity, legal enforceability, safeguarding and operational resilience. Its blog post sums up the ask as a zero haircut “subject to objective safeguards”. The letter does not say how those safeguards would be written into Rule 15c3-1. In its section on offerings, it only asks the SEC to settle what happens when a stablecoin later loses its eligibility.

The second ask: stablecoins in the customer reserve account

The haircut concerns a broker’s own money. Circle’s next request concerns its customers’ money. Under Rule 15c3-3, the customer protection rule, a broker that holds customer cash must work out each week the net amount it owes them and keep at least that amount in a special reserve bank account for their exclusive benefit. The letter notes that these provisions “currently contemplate cash and qualified securities”.

The company wants the Commission to clarify, or amend the rules if needed, whether qualifying payment stablecoins can be treated as cash in that framework, and to “issue an appropriate rule amendment” on how they should be treated in the reserve account. That is a heavier request than the haircut. A staff FAQ can change the staff’s view of capital; it cannot rewrite the list of assets a rule allows in a customer reserve account.

Circle also says these changes “should be coordinated with, not inferred from, Regulation Crypto Assets”. In plain terms, Circle accepts that the offering rule it is commenting on is not where these changes can be made. Regulation Crypto Assets is a Securities Act exemption for token offerings. The haircut and the reserve account live in Exchange Act rules for brokers, a separate rulebook.

Ripple asked for a 0% haircut in May

Circle is not the first stablecoin issuer to push on this point. In written input to the SEC’s Crypto Task Force dated 22 May 2026, Ripple, which issues the RLUSD stablecoin, said stablecoins should have a 0% haircut “provided there is a mint-burn relationship between the broker-dealer and issuer”. The document followed a meeting with the task force and Peirce on 20 March.

Ripple’s reasoning was different from Circle’s. It calculated the standard deviation of daily price changes for RLUSD and USDC and argued that a 2% fall would be a 47.85 standard deviation move for RLUSD. It proposed that the haircut equal the maximum burn fee for brokers able to redeem directly with the issuer, while brokers without that direct line would keep a secondary-market haircut, at 2% or a lower future level. It also asked for a category of “Qualified Payment Stablecoins” in Rule 15c3-3, and noted that the 2% money market fund haircut dates back to 1982.

So two issuers now want zero, by two routes. Ripple ties it to a direct redemption line between broker and issuer. Circle ties it to compliance with the GENIUS Act. Coindaro found no public SEC reply to either.

The rest of the letter: stablecoins as cash in token offerings

The two broker-dealer requests fill two paragraphs of a letter mostly about the offering rule itself. The SEC proposed that regime on 18 August 2026 (Release 33-11434). It offers two exemptions from registration for offerings of investment contracts tied to crypto assets: up to $5 million over four years, and up to $75 million in each 12-month period, in two tiers. The comment period closed on 20 October, the day Circle filed. Our report on the comment deadline covers what Nasdaq, community banks and others asked for.

The main request there is that a GENIUS-compliant stablecoin count as “cash” under proposed Rule 302(b), which refers to securities “offered for cash”. The proposal already says, in its footnote 114, that permitted payment stablecoins received by an issuer count towards the aggregate offering price. Circle argues that an issuer should not have stablecoins count against its limit while being barred from the provisions that apply to cash offerings. It also wants a stablecoin redeemable one for one to be valued at its dollar amount, with no separate appraisal just because the payment is recorded on a blockchain.

The same section would also narrow the field. Circle asks the SEC to make clear that only GENIUS-compliant payment stablecoins may be used as consideration or settlement assets under the regime, which would shut out coins whose issuers do not meet the Act. How USDC and its largest rival differ on reserves and regulation is in our guide to the differences between USDT and USDC.

The other requests are technical: accounting guidance from the SEC’s Office of the Chief Accountant on when such stablecoins count as cash, room for networks with a known set of validators such as Circle’s own Arc chain, and a statement in the rule text that running that validator set after launch is not an “essential managerial effort”.

Who gains if the haircut goes to zero

Broker-dealers holding stablecoins on their own books would see their capital count rise by $20 million per billion. Peirce wrote in February that using stablecoins would make it feasible for brokers to take on more business in tokenized securities and other crypto assets.

Circle gains too. A zero haircut and a place in customer reserve accounts would give brokers a reason to keep USDC on hand rather than move it back to bank deposits. Our page on Circle and how USDC makes money explains why every dollar of USDC held matters to its revenue: the company earns interest on the reserves.

What the SEC has and has not said

The only Commission-level signal is Peirce’s February statement. “I would like to consider how Rule 15c3-1 could be amended to account for payment stablecoins,” she wrote, and she invited market participants to send their views. That is one commissioner’s wish, not a proposal. No amendment to Rule 15c3-1 or Rule 15c3-3 has been published, and the SEC has not commented on Circle’s letter.

There are two ways the 2% could move. The staff could revise its FAQ, as it did in February, which is quick but leaves the treatment as a staff position the Commission can change at any time. Or the Commission could propose an amendment to the net capital rule, which would need a public comment period before a final vote. The reserve account request, by Circle’s own wording, needs a rule amendment.

The calendar adds a fixed point. The GENIUS Act takes effect on 18 January 2027, as set out in our explainer on the GENIUS Act start date, and from then on the FAQ’s definition of payment stablecoin switches to coins issued by permitted issuers. The OCC published its final GENIUS Act rule on 21 October, with the same 18 January start. Circle’s argument rests on that licensing regime being in force.

Timeline of the stablecoin haircut debate

Readers outside the United States see no direct change: Rule 15c3-1 and Rule 15c3-3 apply only to SEC-registered broker-dealers. The next thing to watch is whether the Trading and Markets staff updates question 5 of its FAQ, or whether the Commission puts a net capital amendment on a meeting agenda before the GENIUS Act starts in January.