Circle Asks SEC to Change Stablecoin Capital Rules

Circle has submitted a formal request to the SEC to change the regulatory treatment of stablecoins in securities transactions. The company wants qualified digital assets to be recognized as cash. This measure aims to eliminate a rule that requires a 2% haircut on regulatory capital.

Currently, this requirement reduces the recognized value of reserves by 20 million dollars for every 1 billion dollars held. The USDC issuer's proposal seeks to facilitate the use of these assets by financial institutions. The goal is to remove barriers that hinder the institutional adoption of digital currency in traditional markets.

The request responds to an SEC proposal regarding the regulation of crypto asset offerings. Circle argues that stablecoins issued under GENIUS Act standards should follow the same procedures as conventional money. Without this clarity, companies face distinct requirements depending on the payment method used by investors.

The company also requests that stablecoins redeemable one-to-one be valued at their corresponding dollar amount. This would avoid additional valuation costs imposed solely by the blockchain nature of the asset. The firm argues that using tokens as payment should not automatically subject issuers to securities obligations.

These changes could expand the integration of digital assets into the global financial system by reducing regulatory friction. The shift in capital treatment directly impacts the liquidity risk profile and cost efficiency for large stablecoin holders.