Circle Asks the SEC to Treat Regulated Stablecoins Like Cash: What the 2 Percent Haircut Fight Means for Your Digital Dollars

Circle has formally asked the US Securities and Exchange Commission to treat regulated payment stablecoins like cash across securities markets, a request that could hand digital dollars such as USDC a much bigger role inside Wall Street.

By Raj Patel | October 29, 2026

If you hold stablecoins, this seemingly dry regulatory filing matters more than it looks. The rules that decide whether a digital dollar counts as “cash” inside the securities industry determine how easily banks, brokers, and trading firms can use tokens like USDC in their everyday business. When usage barriers fall, demand for regulated stablecoins tends to rise, and that slowly widens the bridge between your crypto wallet and the traditional financial system.

The Hook: Circle’s Letter to the SEC

On October 28, 2026, Circle, the issuer of USDC, published a statement outlining proposals it sent to the SEC. The letter, filed on October 20, responds to the SEC’s proposed Regulation Crypto Assets, the same framework that would let companies raise up to 75 million USD annually through certain token offerings without full securities registration, alongside a smaller exemption capped at 5 million USD over four years.

Circle says it supports the framework. But the company wants the SEC to go one step further: it wants payment stablecoins issued under the GENIUS Act’s regulatory standards to qualify as cash when investors use them to participate in those offerings. Think of it as asking the referee to treat a digital dollar exactly like a paper dollar when it crosses the goal line.

The Details: Three Specific Requests

According to Circle’s letter and the accompanying statement, the requests focus on three areas of securities market plumbing:

• Cash treatment in fundraising. Companies receiving qualifying stablecoins in an offering should be able to use the same procedures available when investors contribute conventional cash, instead of facing different requirements depending on whether payment arrives by bank transfer or blockchain token.
• One-for-one valuation. Stablecoins that remain redeemable one-for-one should be valued at their corresponding dollar amount, avoiding extra valuation rules purely because the payment moved on a blockchain.
• No automatic securities status. Accepting stablecoins as payment should not automatically subject those tokens or their issuers to the securities obligations governing the assets being sold.

The backdrop is the GENIUS Act, the federal law that established standards for stablecoin issuance, reserves, redemption, and supervision. The Office of the Comptroller of the Currency has finalized its implementing rules, and the legislation and regulations are scheduled to take effect on January 18, 2027.

The Core Conflict: A Costly Haircut on Wall Street

The most consequential request concerns how securities firms calculate their regulatory capital, the financial cushion that determines their capacity to trade and absorb losses. Under SEC staff guidance updated in February, broker-dealers can apply a 2 percent haircut to qualifying stablecoin positions held for their own accounts when calculating net capital.

In plain terms, a broker holding a qualifying 1 billion USD stablecoin position would see a 20 million USD reduction in calculated net capital. That deduction makes stablecoins marginally more expensive to hold than cash, and Circle wants it eliminated for stablecoins that meet the GENIUS Act’s requirements. The company argues the law’s reserve, redemption, liquidity, and consumer protection standards justify better treatment than other digital assets.

Circle also asked the SEC to clarify whether compliant stablecoins can satisfy Rule 15c3-3, the customer protection rule that forces broker-dealers to keep qualifying assets in reserve accounts to protect customer funds. Today those requirements effectively contemplate cash and qualified securities. Opening the door to digital dollars would create another institutional use case for USDC and its regulated competitors.

Market Implications for Everyday Investors

Why should a regular investor care about brokerage capital math? Because institutional adoption is the engine behind stablecoin demand. If the SEC agrees that compliant digital dollars deserve zero haircuts and reserve eligibility, broker-dealers gain a practical incentive to hold and move value in stablecoins rather than only in bank money. That translates into deeper liquidity, faster settlement, and more places where your crypto holdings connect directly to traditional markets.

There are limits, however. The existing 2 percent treatment comes from nonbinding SEC staff guidance, not a formal Commission rule, so a zero haircut would require further regulatory acceptance. The real-world benefit also depends on how much stablecoin inventory brokers actually carry. And Circle’s requests are just one side of the conversation: the SEC must weigh whether GENIUS Act safeguards truly match the resilience of insured bank deposits.

The Verdict

Circle’s letter is a serious attempt to lock in the next phase of stablecoin integration before the GENIUS Act rules take effect in January 2027. The direction of travel is clear: regulated digital dollars are being pushed toward full parity with cash inside the securities industry. For investors, the practical takeaway is patient optimism. Nothing changes overnight, but each clarification that treats compliant stablecoins like ordinary money quietly strengthens the foundation under the tokens you may already hold. Watch the SEC’s response to Regulation Crypto Assets comment letters, because that is where the next concrete decision will land.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.