New SEC Guidance Pushes Stablecoins Closer to Cash Status

For banks, broker-dealers, and clearing firms, the primary obstacle to engaging with crypto has rarely been philosophical skepticism. It has instead been the 800-pound-gorilla in the room made up of the balance-sheet frictions digital assets bring with them, and the many regulatory pitfalls still surrounding the crypto industry particularly in the U.S.

But U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins and SEC Crypto Task Force leader Hester Peirce are trying to change that. On Feb. 19, the staff of the SEC’s Division of Trading and Markets issued an updated FAQ relating to the accounting treatment of payment stablecoins, marking a clear step forward toward integrating certain stablecoins into the regulated securities ecosystem.

The new guidance permits broker-dealers to apply a 2% capital “haircut” to certain qualifying stablecoins when calculating regulatory capital. In practical terms, firms may now recognize roughly 98% of a stablecoin’s value toward their capital requirements.

Capital treatment is not an esoteric concern. It is the language through which regulators decide what counts as money-like and what remains speculative inventory. By permitting firms to count roughly 98% of a qualifying stablecoin’s value toward regulatory capital, the SEC has effectively moved these instruments several steps closer to cash and high-quality liquid assets in the hierarchy that governs balance-sheet construction.

A 100% haircut, after all, makes an asset functionally dead weight. A 2% haircut allows it to behave more like operational cash.

While the move is far from formal rulemaking, it signals for broker-dealers, tokenization platforms and institutional market infrastructure providers that stablecoins may be transitioning into a real-world operational tool.

See also: Banks and Stablecoin Wallets Battle for Digital Cash’s Front Door

Why the SEC’s Updated Guidance Matters

Under traditional capital rules, assets perceived as volatile or operationally complex receive steep “haircuts,” forcing institutions to hold more capital against them. This makes such assets expensive to warehouse and unattractive to use in core financial workflows like settlement, collateral management or liquidity provisioning.

The paradox surrounding stablecoins was that while the blockchain technology promised faster settlement, programmable payments and the possibility of round-the-clock markets, the regulatory capital penalties attached to holding them rendered those advantages largely theoretical.

The SEC’s change materially lowers both the cost and balance-sheet friction associated with holding stablecoins, the core dynamic that had previously limited their adoption by banks and broker-dealers. The update was not a blanket endorsement of the stablecoin sector by the SEC, but a conditional recognition that certain instruments, if structured and regulated appropriately, can serve legitimate transactional roles inside securities markets.

The implications extend beyond trading desks. If stablecoins can be held with near-cash treatment, they become candidates for collateral management, securities settlement and cross-border liquidity operations. Broker-dealers could use them to compress settlement timelines. Market makers could deploy them to move capital continuously rather than waiting for banking windows. Over time, this could chip away at one of the most anachronistic features of modern finance: markets that trade at digital speed while money still moves in batches.

Notably, the SEC has not amended Rule 15c3-1 itself. Instead, it has acted through staff-level interpretive guidance, which represents an approach that offers flexibility while avoiding the procedural weight of formal rulemaking.

The PYMNTS Intelligence and Citi report “Chain Reaction: Regulatory Clarity as the Catalyst for Blockchain Adoption” found that blockchain’s next leap will be shaped by regulation; that evolving guidance is beginning to create the foundations for safe, scalable blockchain adoption; and that implementation challenges continue to complicate progress.

See also: Behind the Stablecoin Buzz, Old-School Infrastructure Still Runs the Show

Industry Response Will Determine the Pace of Adoption

The SEC’s posture is also one of coordination with the broader statutory environment emerging around stablecoins, particularly the recently enacted GENIUS Act, which establishes a framework for payment stablecoins subject to defined reserve, supervision and operational requirements.

By anchoring its guidance to stablecoins that fit within this emerging legal category, the SEC is drawing a line between instruments designed to function as regulated payment tools and those operating in less transparent environments.

Despite its significance, the SEC’s action is deliberately narrow. The guidance applies to proprietary positions held by broker-dealers, not broadly to customer assets. It assumes rigorous qualification standards for stablecoins and does not eliminate the need for firms to manage liquidity, custody and operational risks.

Whether this regulatory opening leads to meaningful transformation depends less on policy language than on institutional uptake. Broker-dealers must now decide whether the capital relief justifies building new operational capabilities, while stablecoin issuers now have to demonstrate transparency and resilience sufficient to meet supervisory scrutiny.