The U.S. Securities and Exchange Commission (SEC) has issued updated guidance that significantly clarifies and eases regulatory treatment for cryptocurrency market activities. The new guidance, released on February 20, 2026, provides a framework for broker-dealers and trading platforms, marking a notable shift toward integrating digital assets into the traditional financial system.
A key clarification allows national securities exchanges and Alternative Trading Systems (ATSs) to facilitate direct trading pairs between crypto asset securities and non-security assets like Bitcoin. This means security tokens can now trade directly with Bitcoin without the need for an intermediate conversion into fiat currency. The SEC emphasized that this activity must still comply with existing federal securities laws, including Regulation ATS for ATSs.
In a major development for capital requirements, the SEC's Division of Trading and Markets stated it "would not object" if broker-dealers apply a mere 2% haircut to proprietary positions in qualifying payment stablecoins when calculating net capital. This is a dramatic reduction from the prior de facto 100% deduction, which had effectively rendered stablecoin balances worthless for capital purposes. The move aligns compliant stablecoins with conservative money market funds, meaning $100 in stablecoins can now count as $98 toward a firm's net capital.
SEC Commissioner Hester Peirce framed the haircut change as a long-overdue correction to a punitive regime that had made on-chain settlement uneconomic for regulated dealers. The guidance is seen as a follow-through on the GENIUS Act, which established standards for stablecoin issuers.
The SEC also clarified that broker-dealers can combine brokerage, custody, and clearing functions within a single operation, provided each function independently complies with securities laws. A separate clearing agency registration is not required for clearing customer trades as part of regular business. Furthermore, the agency provided guidance on crypto exchange-traded products (ETPs), stating it would not oppose transactions in crypto ETP shares under the same conditions outlined in a 2006 Regulation M no-action letter, provided they are listed on a national securities exchange.
Market participants view these updates as a significant step toward deeper integration between traditional market structure and on-chain liquidity, potentially setting the stage for broader crypto market-structure legislation.
