SEC Allows 2% Haircut on Stablecoin Positions for Broker-Dealers

What Did the SEC Change?

The U.S. Securities and Exchange Commission has issued new guidance allowing broker-dealers to apply a 2% haircut to proprietary positions in certain stablecoins, a move that narrows the gap between digital assets and traditional financial instruments.

In guidance released Thursday by the SEC’s Division of Trading and Markets, staff addressed how broker-dealers can treat stablecoins under the customer protection rule, which requires firms to safeguard client assets and hold a buffer against proprietary holdings. The new FAQ states that “staff would not object if a broker-dealer were to apply a 2% haircut on proprietary positions.”

A haircut is a percentage reduction applied to the value of an asset when calculating regulatory capital or collateral. The lower the haircut, the closer the asset is treated to cash-like instruments in terms of risk weighting.

Why Does a 2% Haircut Matter?

Haircuts reflect perceived volatility and credit risk. Assets considered riskier typically receive larger haircuts, reducing their usable value on a firm’s balance sheet. In the case of stablecoins, some broker-dealers had reportedly been applying a 100% haircut, effectively treating them as unusable for regulatory capital purposes.

Tonya Evans, a fintech strategist and board member of Digital Currency Group, said that practice made holding stablecoins impractical for brokers.

“A 2% haircut changes that calculus entirely by putting payment stablecoins on par with money market funds, which hold similar underlying assets like U.S. Treasuries, cash, and short-term government securities,” Evans wrote in a Forbes article.

By aligning the haircut more closely with money market treatment, the guidance reduces the regulatory penalty attached to holding qualifying stablecoins. That adjustment could influence how broker-dealers incorporate digital assets into treasury, settlement, and trading operations.

Investor Takeaway

What Did Commissioner Peirce Say?

SEC Commissioner Hester Peirce welcomed the guidance, linking it to broader digital asset activity inside regulated firms.

“Stablecoins are essential to transacting on blockchain rails,” she said. “Using stablecoins will make it feasible for broker-dealers to engage in a broader range of business activities relating to tokenized securities and other crypto assets.”

Her remarks frame stablecoins not as speculative tokens, but as infrastructure tools for settlement and tokenized securities markets. If broker-dealers can treat them more like traditional short-term instruments, participation in tokenized asset markets may become operationally simpler.

Part of a Broader Regulatory Reset?

The FAQ follows a series of SEC initiatives focused on digital assets. Over the past year, the agency has established a crypto task force addressing custody and tokenization, launched “Project Crypto” to update legacy rules, and indicated plans for an innovation exemption tied to tokenized capital markets.

At the federal level, agencies are also working to implement the GENIUS Act, passed last year, which establishes a nationwide framework for stablecoin regulation. The law provides guardrails around issuance, reserves, and oversight, creating clearer ground rules for payment-focused tokens.

Market participants view the haircut clarification as a technical change with structural implications. Former Avalanche COO Luigi D’Onorio DeMeo said the guidance would allow stablecoins to be treated more like money market funds.

The move “removes a major friction point,” he wrote in a post on X. “Lowers the barrier for deeper integration of stablecoins into traditional finance rails = better liquidity, more efficient settlement, and broader institutional on-ramp.”

Investor Takeaway

What Comes Next?

The guidance does not automatically apply to all digital assets and does not eliminate other capital or custody requirements. It does, however, clarify how certain stablecoins may be treated under existing broker-dealer rules.

For firms exploring tokenized securities or blockchain-based settlement, regulatory capital treatment has been a practical constraint. With a 2% haircut now deemed acceptable by staff, stablecoins move closer to established short-term instruments in regulatory calculations — a change that could influence how quickly traditional intermediaries integrate blockchain-based payment rails.