SEC Quietly Adjusts Broker-Dealer Stablecoin Holdings

The US Securities and Exchange Commission (SEC) has made a subtle yet significant change to its regulations, giving broker-dealers the option to count their stablecoin holdings as regulatory capital. This development comes in the form of an updated FAQ document on the SEC's website, specifically under the 'Broker Dealer Financial Responsibilities' section.

According to the revised guidance, firms can apply a 2% haircut to their stablecoin holdings, meaning they can effectively count 98% of these assets towards their capital requirements. This change is expected to have far-reaching implications for the industry, as it enables broker-dealers to more easily provide liquidity, aid settlement, and advance tokenized finance.

SEC Commissioner Hester Peirce has expressed enthusiasm for this development, stating that using stablecoins will make it feasible for broker-dealers to engage in a broader range of business activities related to tokenized securities and other crypto assets. However, some critics have noted that this shift is an informal staff policy, which can be reversed by a new leadership at the agency.