Circle asks SEC to treat qualifying stablecoins as cash-like assets and cut haircut to zero
Circle wants the SEC to treat qualifying payment stablecoins as cash-like assets when they are used to pay for or settle certain offerings. It also wants the SEC to eliminate a 2% broker-dealer capital haircut on qualifying stablecoin holdings, subject to safeguards.
- Circle wants the rules coordinated with the GENIUS Act.
- The SEC’s proposed fundraising exemptions have limits and disclosure requirements.
- Circle’s requests do not resolve how brokers should treat customer assets.
- A separate filing from the Hyperliquid Policy Center raises questions about token trading and safe-harbor rules.
Circle’s case for stablecoins as payment
Circle supports the SEC’s proposed Regulation Crypto Assets, a framework for certain crypto-related fundraising. In a comment letter filed on October 20, described in a blog post on October 28, the company asked the SEC to coordinate the proposal with the GENIUS Act.
Circle wants payment stablecoins that meet the Act’s requirements to count as consideration or settlement assets under the SEC framework. In practical terms, companies could use eligible stablecoins to pay for or settle an offering. For dollar tokens designed to be redeemable one-for-one, Circle wants the SEC to recognize their corresponding dollar value.
This would be a regulatory treatment, not a guarantee that a token will always trade at a dollar or can be redeemed instantly and without conditions. Circle also distinguishes between the token being sold and the stablecoin used to pay for it. Accepting a stablecoin, it argues, should not make the stablecoin issuer responsible for the fundraising company’s obligations.
Circle also wants stablecoin payments treated consistently when calculating offering limits and applying provisions for securities offered for cash. Regulators still need to settle the precise requirements for an eligible stablecoin and how those requirements will work alongside the GENIUS Act’s implementation.
Circle has a direct commercial interest in the outcome: it issues USDC, a payment stablecoin. That does not invalidate its arguments, but it does mean the filing is industry advocacy, not an independent assessment of the risks.
Two proposed fundraising exemptions
The SEC’s proposal, dated August 18, 2026, would create two exemptions for qualifying offerings. One would allow a one-time offering of up to $5 million during a four-year period. The other would allow offerings of up to $75 million in each 12-month period.
Both routes would require disclosures. The larger exemption would also require financial statements and continuing reports. These are conditional routes for fundraising, not blanket permission for any project to sell tokens.
The proposal also includes a conditional safe harbor. If a project meets its requirements, a qualifying crypto asset would be deemed not subject to an investment contract for purposes of the relevant Securities Act and Exchange Act definitions. The SEC describes the relevant trigger as the completion or permanent cessation of essential managerial efforts represented or promised under an investment contract. The SEC’s fact sheet on the application of federal securities laws provides related context.
That treatment would depend on meeting the safe-harbor conditions. It would not automatically exempt every token sale or trading venue. The proposal would also preempt state securities-law registration and qualification requirements for offers and sales made under its exemptions, as well as certain secondary-market transactions. That is limited preemption, not a blanket removal of state oversight.
Why Circle wants a zero haircut
A capital haircut reduces the value assigned to an asset in a broker-dealer’s net-capital calculation. SEC staff has said it would not object to a 2% haircut for certain qualifying stablecoin positions, according to Legal500’s summary of the staff’s guidance. This treatment applies to a broker’s own holdings, or proprietary positions, not customer holdings.
Circle wants the haircut on qualifying positions reduced from 2% to zero, subject to objective safeguards. A February 19 staff FAQ is cited in connection with the existing 2% treatment, but the year and detailed mechanics are not specified here. Circle also seeks appropriate accounting and customer-reserve treatment.
These questions should be kept separate. A stablecoin’s use as payment for an offering is distinct from how a broker handles customer assets. Circle’s requested recognition under the offering rules would not, by itself, settle customer-protection or accounting requirements.
SEC Commissioner Hester Peirce has supported the staff’s approach and called for consideration of amending Rule 15c3-1, the broker-dealer net-capital rule, to account for payment stablecoins. A zero haircut would still require regulators to decide what safeguards justify counting a qualifying position at full value.
Validator work and secondary trading
Circle is also seeking clarity on whether maintaining a known validator set after a network becomes functional counts as “essential managerial efforts.” Validators help operate or secure a blockchain network. Circle argues that keeping a validator group in place should not, on its own, mean a project still depends on essential managerial work.
It also wants clearer treatment for technical roadmaps aimed at improving functioning networks. Regulators will need to distinguish routine technical maintenance from work that remains essential to a project’s success. The proposal’s practical effect will depend on where they draw that line.
The Hyperliquid Policy Center raised related questions in a separate submission. Its requests are not part of Circle’s filing. HPC wants the SEC to clarify whether onchain protocols and other intermediaries may facilitate secondary trading of tokens distributed under the proposed exemptions.
HPC also argues that safe-harbor certification could create a problem for projects that maintain no investment contract ever existed: they may be asked to certify that one has ended. This is a concern about the proposal’s wording, not a settled conclusion about the legal consequences.
HPC’s other requests cover airdrops, developer protections, automated buybacks and state securities requirements. Together, these questions point to a practical issue: permission to raise funds does not necessarily tell a project whether or how its tokens can trade afterward.
Key questions and answers
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What does Circle want stablecoins used for in offerings?
It wants qualifying, GENIUS Act-compliant payment stablecoins recognized as cash-like consideration or settlement assets. For dollar tokens designed to be redeemable one-for-one, Circle seeks valuation at the corresponding dollar amount.
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What is Circle asking about the 2% haircut?
It wants the haircut on qualifying broker-dealer proprietary stablecoin positions reduced to zero, subject to objective safeguards. That request does not itself resolve how brokers should treat customer assets.
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How large are the SEC’s proposed fundraising exemptions?
One would allow a one-time offering of up to $5 million during a four-year period; the other would allow offerings of up to $75 million in each 12-month period. Both require disclosures, and the larger exemption adds financial statements and continuing reports.
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Does the proposal remove state securities requirements for every token?
No. Its proposed preemption covers registration and qualification requirements for offerings under the exemptions and certain secondary-market transactions, not all tokens or projects.
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What does HPC want clarified about token trading?
It wants the SEC to explain whether protocols and other intermediaries can facilitate secondary trading of tokens distributed under the exemptions. Its separate filing also raises concerns about airdrops, buybacks and safe-harbor certification.
