Circle is urging the U.S. Securities and Exchange Commission to recognize qualifying payment stablecoins as cash for certain purposes under a proposed regulatory framework for crypto assets. In a policy statement published October 28, the issuer of USDC outlined recommendations it submitted to the SEC on October 20.
Circle’s official explanation of its comment letter addresses proposed Regulation Crypto Assets, which would create a tailored framework for some digital asset offerings and investment contracts. The company supports clearer rules but argues that the framework should account for payment stablecoins used in settlement.
Circle requests cash treatment for stablecoins
Circle asks the SEC to clarify that payment stablecoins meeting relevant requirements under the GENIUS Act can qualify as cash for proposed Rule 302(b), including appropriate dollar-based valuation and treatment of broker-dealer customer reserves.
It separately proposes reducing the existing 2% broker-dealer haircut to zero for qualifying payment stablecoins, subject to objective safeguards. A haircut is a regulatory discount applied when measuring an asset’s value for certain capital or customer-protection purposes.
That change is Circle’s recommendation, not a rule that the SEC has already adopted. The company argues that prudential treatment should reflect the backing and redemption characteristics of compliant payment stablecoins.
GENIUS Act coordination is central
The company wants the SEC’s proposed crypto framework to operate consistently with the GENIUS Act, particularly where stablecoins serve as a payment or settlement asset in onchain financial transactions.
Circle also advocates technology-neutral requirements for public, permissionless networks. It says regulators should distinguish ongoing technical maintenance, such as validator coordination, from managerial efforts that might affect the legal characterization of an investment contract.
Another request concerns a safe harbor for technical roadmaps, so improvements to already-functional networks would not automatically reopen certain securities-law analyses.
What happens next
The SEC has not, by virtue of receiving the letter, accepted Circle’s proposals. The eventual rule text, if adopted, could differ significantly from the company’s requested approach.
Financial institutions would still need to consider reserves, custody, redemption rights and applicable compliance requirements when using payment stablecoins. BlockBriefing recently covered Circle and ACI Worldwide’s USDC settlement demonstration in Colombia, a separate commercial initiative.
The policy debate is significant because even small changes in the regulatory classification of stablecoins can affect how intermediaries handle client balances and collateral. The ultimate consequences will depend on the SEC’s final decisions.
Primary source: Circle’s October 28, 2026 policy statement, referring to its October 20 SEC submission.
