Circle wants SEC to erase a costly Wall Street rule holding stablecoins back
Circle’s SEC letter seeks separate permissions for offerings, brokerage capital and customer reserves, showing where issuer regulation leaves further decisions. Read the full story on CryptoSlateUnderstand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox
Circle is urging the US Securities and Exchange Commission (SEC) to treat regulated stablecoins like cash across securities markets, potentially expanding USDC's institutional adoption.
The USDC issuer outlined its proposals in an Oct. 28 statement, following an Oct. 20 letter requesting changes to how qualifying stablecoins are treated in securities fundraising, brokerage capital calculations, and customer reserve accounts.
The proposed changes could give stablecoins a broader role in traditional finance by allowing financial institutions to use them for activities currently governed by cash-specific requirements. This could create new demand for USDC as Circle seeks to expand its presence in institutional financial markets.
Circle's letter responds to the SEC's proposed Regulation Crypto Assets, which would establish a new framework for companies raising capital through certain cryptocurrency offerings.
The proposal introduces two exemptions from traditional securities registration requirements. One would let companies raise up to $5 million over four years, while another would allow offerings of up to $75 million annually, subject to disclosure and other requirements.
Circle supports the framework but wants regulators to clarify that payment stablecoins issued under the GENIUS Act's regulatory standards qualify as cash when investors participate in these offerings.
The current proposal already allows permitted stablecoins to count toward the total amount raised. However, Circle argues that the SEC should go further by allowing issuers receiving those tokens to use the same procedures available when investors contribute conventional cash.
Without that clarification, companies could face different regulatory requirements depending on whether investors pay through bank transfers or blockchain-based dollar tokens.
Circle also wants qualifying dollar stablecoins that remain redeemable one-for-one to be valued at their corresponding dollar amount. This would avoid additional valuation requirements solely because payments occur on a blockchain.
The company further argues that accepting stablecoins as payment should not automatically subject those tokens or their issuers to the securities obligations governing the assets being sold.
These requests build on the GENIUS Act, which established a federal framework covering stablecoin issuance, reserves, redemption, and supervision.