Circle seeks SEC approval to treat stablecoins as cash in proposed regulations

Circle, the US-based issuer of the USDC stablecoin, has formally requested that the Securities and Exchange Commission (SEC) clarify how qualifying payment stablecoins should be treated under its proposed crypto-asset regulatory framework. The company submitted a detailed comment letter advocating for stablecoins to be classified as cash for specific regulatory calculations and allowed as settlement assets in tokenized transactions.

Circle’s requests to the SEC

In its letter, Circle asked the SEC to align its new Regulation Crypto Assets proposal with current payment stablecoin regulations, including the GENIUS Act. The letter emphasized that clear treatment of payment stablecoins is vital for market participants and intermediaries managing tokenized assets.

Specifically, Circle has requested that qualifying stablecoins receive “cash treatment” under proposed Rule 302(b), a measure that would impact the way balance-sheet and reserve calculations are handled by broker-dealers involved in crypto transactions. Additionally, the company sought a reduction in the standard broker-dealer “haircut” deduction from 2% down to zero for eligible stablecoins, subject to defined safeguards that ensure financial stability.

A haircut refers to the percentage by which an asset’s value is reduced for regulatory purposes or risk management. Lowering the requirement to zero could improve capital efficiency for intermediaries holding these assets.

Circle’s letter argued that “payment stablecoins should be considered cash equivalents in settlement and reserve calculations, provided appropriate safeguards are applied.”

The SEC has not adopted Circle’s proposed changes, and the ultimate regulatory approach could diverge from Circle’s recommendations. The company acknowledged in its communication that its position represents a policy request, not a regulatory outcome.

Key points under consideration

Circle also called for clarity regarding ongoing technical development on functional blockchain networks. The company asked the SEC to distinguish between maintenance that keeps a network operational and managerial actions that could constitute an investment contract, potentially triggering additional regulations.

Questions remain about which stablecoins would qualify for the proposed treatment and what safeguards would be necessary. Final decisions rest with the SEC, and regulatory text may differ from Circle’s recommendations.

Circle, known for operating the widely used USDC stablecoin, plays a central role in the digital assets ecosystem by facilitating fiat-to-crypto settlements.

Mini dictionary: GENIUS Act — A US legislative proposal aimed at clarifying and regulating the use of payment stablecoins, including their legal and financial treatment under federal law.

Market context and reaction

The regulatory uncertainty surrounding stablecoin classification has drawn attention from issuers, intermediaries, and investors. Questions about redemption, custody, and reserve backing remain relevant for all tokenized assets, regardless of proposed regulatory changes.

On November 2, 2026, market data from CoinGecko showed that Bitcoin and Ether posted modest gains over 24 hours, while XRP and Solana experienced small declines. These price changes occurred independently of Circle’s regulatory request, with no evidence indicating a direct response from the broader market.

These figures represent a snapshot of market conditions at that time and do not demonstrate a reaction specifically tied to Circle’s proposals.

What comes next?

The SEC has not issued any final decisions regarding Circle’s requested rule changes. Further developments will depend on whether the agency revises its proposals or issues new guidance in response to stakeholder feedback.

Clarification from the SEC on which tokens qualify, the application of cash treatment, and necessary safeguards would be essential for the industry’s next steps.

Ongoing debate over what constitutes technical maintenance versus managerial involvement on blockchain networks will likely remain a key focus, as this distinction can affect regulatory classification.

While Circle’s requests highlight important industry concerns, the legal status of stablecoins and the precise details of their regulatory treatment are yet to be determined by the Commission.