SEC Staff Issues Guidance on Treatment of Payment Stablecoins under the Broker-Dealer Net Capital Rule (2% Haircut)

On February 19, the staff of the Division of Trading and Markets of the U.S. Securities and Exchange Commission issued an FAQ, stating the staff will not object if a broker-dealer treats a proprietary position in a payment stablecoin (as defined in the FAQ) as having a “ready market” under SEC Rule 15c3-1 and takes a haircut of 2% of the market value of the greater of the long or short proprietary position in calculating its net capital. 

In a related statement, Commissioner Hester M. Peirce noted that “Rule 15c3-1 does not explicitly address payment stablecoins. I understand that some broker-dealers, out of an abundance of caution, have proposed to take a 100% haircut on payment stablecoins held in their inventory. In my view, a 100% haircut would be unnecessarily punitive given the underlying reserve assets that back payment stablecoins (generally, U.S. dollars, short-term U.S. Treasury securities and other similar instruments).  For context, a haircut of 2% aligns with the haircut imposed on registered investment companies that are money market funds, which hold similar instruments as payment stablecoin issuers. In fact, following the effective date of the GENIUS Act, the reserve requirements for permitted payment stablecoin issuers will be more limiting than the ‘eligible securities’ requirements that apply to registered money market funds, including government money market funds.”

Commissioner Peirce further stated that she would like to consider how SEC Rule 15c3-1 could be amended to account for payment stablecoins and that she would welcome input on other aspects of SEC rules that should be modified to address the use of payment stablecoins by SEC-registered entities.