The US Securities and Exchange Commission (SEC) has paved the way for Wall Street to integrate stablecoins into traditional finance.
On February 19, the financial regulator issued guidance allowing broker-dealers to apply a 2% “haircut” to positions in payment stablecoins. A haircut is the percentage of an asset’s value that a financial institution cannot count toward its deployable capital, acting as a customer-protection buffer against market risk.
SEC Stablecoin Pivot Pressures Brokers to Build Crypto Rails
Previously, broker-dealers faced a punitive 100% haircut on stablecoins. If a financial firm held $1 million in digital dollars to facilitate rapid on-chain settlement, it had to lock up that capital.
That requirement effectively made institutional crypto trading economically radioactive for traditional financial institutions.
By dropping the capital penalty to 2%, the SEC has granted compliant stablecoins the same economic treatment as traditional money market funds.
“This is another terrific step in the right direction from our team in the Division of Trading and Markets to remove barriers and unlock access to on-chain markets,” SEC Chair Paul Atkins said.
Interestingly, this pivot is heavily anchored in the newly passed GENIUS Act. This is a federal regulatory framework for payment stablecoins in the US. It mandates 1:1 reserve backing and strengthens anti-money laundering (AML) compliance.
SEC Commissioner Hester Peirce noted that the new legislation forces stringent reserve requirements for stablecoin issuers.
According to her, these requirements are even stricter than those applied to government money market funds, which justify the reduced capital penalty.
“Stablecoins are essential to transacting on blockchain rails. Using stablecoins will make it feasible for broker-dealers to engage in a broader range of business activities relating to tokenized securities and other crypto assets,” Peirce added.
In light of this, US-regulated entities such as Circle’s USDC could see substantial adoption from firms in the $6 trillion sector.
As a result, industry executives were quick to celebrate the digital asset industry’s shifting fortunes.
Exodus CEO JP Richardson called it the most important crypto win of the year. He argued it makes tokenized treasuries, equities, and on-chain settlement “economically viable overnight.”
“This puts pressure on every major broker-dealer to build stablecoin infrastructure or fall behind the ones who do. Because their competitors now can and there’s no longer a capital penalty that makes it uneconomical,” he explained.
Meanwhile, this approval continues the current SEC’s slew of pro-crypto regulations.
Over the past year, the SEC has launched a digital asset task force and initiated “Project Crypto” to modernize its rules. These efforts are designed to make the US the crypto capital of the world.
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