Circle Requests SEC to Treat Stablecoins as Cash

Circle, the issuer of the stablecoin USDC, has requested the U.S. Securities and Exchange Commission (SEC) to treat stablecoins that meet regulatory requirements the same as cash. This move aims to expand the use of digital dollars in areas such as securities issuance, broker-dealer capital calculations, and customer protection reserves. On the 20th, Circle submitted a letter to the SEC requesting improvements to relevant regulations and unveiled specific proposals on the 28th. The key point is to eliminate the 2% capital deduction applied to stablecoins held by broker-dealers. According to current SEC staff guidance, broker-dealers must deduct 2% from the value of eligible stablecoins they hold when calculating their net capital, meaning that if they hold $1 billion, the capital recognized under regulation would decrease by $20 million. Circle argued that such deductions should not apply to stablecoins that meet the reserve, redemption, and liquidity requirements of the GENIUS Act. Additionally, Circle requested that eligible stablecoins be recognized as cash under the digital asset securities issuance regulations being pursued by the SEC. These regulations include provisions for a separate registration exemption process for funding up to $5 million over four years and up to $75 million annually. Circle also demanded clarification of regulations to allow the use of stablecoins in reserve accounts for customer fund protection. The regulations related to the GENIUS Act are set to take effect on January 18 of next year. However, Circle's request has not yet received SEC approval.