The company behind USDC wants the SEC to let broker-dealers and companies that raise money treat qualifying stablecoins like cash, including dropping a 2% capital deduction to zero. USDC is Circle’s dollar stablecoin. A payment stablecoin is a token built to hold a steady value, usually one US dollar, and used for payment. A broker-dealer is a company registered to buy and sell securities for customers and for its own account.

Circle Internet Group, Inc. made the request in a comment letter dated 20 October 2026 on the SEC’s proposed Regulation Crypto Assets (docket S7-2026-27, release numbers 33-11434 and 34-106150).

Circle made the letter public on 28 October 2026 in a blog post.

Circle asks the Commission to treat a permitted payment stablecoin that would meet the GENIUS Act’s standards as cash for proposed Rule 302(b) and related mechanics. The cash-offering rule covers securities offered for cash. Circle points out that footnote 114 of the proposal already counts those coins in the aggregate offering price, and section 228.100 builds that price from cash plus any other value the issuer is to receive. As drafted, then, the coins would count toward the offering limit while the issuer still couldn’t use the provisions written for cash offerings. Circle also wants a dollar coin that can still be redeemed one for one valued at one dollar under Rule 100 and the cash-offering rule. An onchain record alone, it says, should not force an appraisal of the kind used for other property.

Circle wants the final rule to keep apart the crypto asset a covered investment contract is built on and the stablecoin used to pay or settle. Receipt should not add that coin as a further asset under section 228.100 or pull its issuer into the offering company’s duties.

According to Circle, section 3(g) of the GENIUS Act allows a cash label for coins from permitted issuers, and section 17 removes them from the securities definitions that apply once the Act is in effect. Paying with the coins should not require an offering exemption or the transition report in proposed Rule 400.

Under section 3(g)(2), Circle asks the final rule to define permitted payment stablecoin or to use the Act’s definitions for the coin and its permitted issuer, so only stablecoins that meet the Act’s standards may pay or settle under the regulation.

Apart from the cash-offering rule, Circle asks the Commission and the Office of the Chief Accountant when such stablecoins may count as cash in financial reports, citing an open consultation at the Financial Accounting Standards Board (FASB) on classifying some payment stablecoins as cash equivalents as a reason to coordinate.

A net capital haircut is the share of an asset’s value a broker-dealer must subtract when it counts its capital. Circle recommends cutting the Rule 15c3-1 deduction, the net-capital rule, from 2% to zero for stablecoins that meet the Act’s standards, on statutory and objective tests: redemption, how sound and liquid the reserves are, whether the legal claim can be enforced, safeguarding, and operational resilience, in line with other cash-like assets.

The 28 October post says that cut would be subject to objective safeguards.

A customer-reserve account is the bank account where a broker-dealer sets aside customer cash and certain securities. According to Circle, Rule 15c3-3 now speaks of cash and of securities the rule already accepts, kept in a bank account for the reserve, and the Commission should clarify or amend the rules so qualifying stablecoins may count as cash in that account or be recognized as eligible assets.

Why the 2% deduction exists

On 19 February 2026, Commissioner Hester M. Peirce published Cutting by Two Would Do. Trading and Markets staff, she wrote, released an FAQ that day on payment stablecoins and the net-capital rule. In the FAQ, staff would not object to a 2% haircut on stablecoins a broker-dealer holds for itself when calculating net capital.

She and Circle both call the FAQ staff guidance. It is not a Commission rule.

Peirce wrote that the net-capital rule does not mention payment stablecoins, so some broker-dealers, out of caution, had floated a 100% inventory haircut in their own capital math. She called a full write-off too harsh for coins backed by reserves she described as U.S. dollars, short-dated Treasuries, and similar instruments. The 2% figure matches the haircut on money market funds, which are registered investment companies with similar holdings.

In that February 2026 statement, Peirce said she wanted the Commission to take up an amendment of the net-capital rule for payment stablecoins and wanted market views, including on other rules where an SEC-registered entity uses these coins.

On a $1 billion position, a 2% haircut leaves $20 million out of the capital count.

Why Circle separates a stablecoin from a fund

Circle calls the staff FAQ a useful stopgap and says the money-market comparison blurs a difference in what the products do.

According to Circle, money market funds are for investing and for cash management. Holders seek a return and bear portfolio, liquidity, and NAV risk. NAV, the price per share, can move.

Circle says the funds lack legal rights and prudential backing for wide payment and settlement use. A dollar stablecoin that meets the Act’s standards is built and supervised only for that use, with one-for-one reserves, capital and liquidity standards, par redemption (one dollar back for one dollar), bankruptcy protections, and legal rights for holders.

Circle wrote that payment stablecoins from permitted issuers are, by the statute’s design, “separate and distinct assets designed for cash use”, unlike money-market funds and tokenized investment contracts.

Where the proposal stands

The Commission proposed Regulation Crypto Assets on 18 August 2026. Comments were due 20 October 2026, the letter’s date. It is still a proposal, and the letter changes nothing on its own. Our explainer covers its two exemptions for raising money and their conditions.

Circle says the capital and reserve changes would need their own staff guidance or Commission action, coordinated with the proposal.

The GENIUS Act and the implementing rule from the U.S. Office of the Comptroller of the Currency take effect on 18 January 2027. The OCC published that rule on 21 October 2026. It covers issuers the OCC supervises. Our 22 October story covers the rule.

This article is not investment advice.