Circle has formally asked the U.S. Securities and Exchange Commission to recognize qualifying payment stablecoins as cash under its proposed crypto fundraising framework and to cut the broker-dealer capital haircut from 2% to zero. In a comment letter filed on October 20 and detailed in an October 28 blog post, the USDC issuer said only GENIUS-compliant payment stablecoins should be permitted as consideration or settlement assets under the SEC's Regulation Crypto Assets proposal.
The proposed rules, published August 18, would create two fundraising exemptions: one up to $5 million over four years, and another up to $75 million within 12 months. Circle argues that accepting stablecoins should not pull issuers into a fundraising company’s obligations and wants token offerings treated separately from the stablecoin used to pay for them. For qualifying dollar tokens redeemable one-for-one, valuation would simply match the dollar amount.
Circle also wants the SEC to reduce the current 2% broker-dealer haircut on qualifying stablecoin positions to zero, subject to objective safeguards. SEC staff had said in a February 19 FAQ that it would not object to the 2% haircut for proprietary positions. Commissioner Hester Peirce supported that staff guidance and said she would like to consider amending Rule 15c3-1 to account for payment stablecoins.
The request comes as Circle's Q2 financials reveal where USDC reserve income goes. The company reported $701.3 million in total revenue and reserve income. Distribution, transaction and other costs absorbed $412.5 million, including $324.6 million tied to Circle's agreements with Coinbase, while operating expenses were another $254.5 million. After other income and tax, net income from continuing operations was $48.2 million.
Circle's terms state that USDC holders outside the European Economic Area are not entitled to interest earned on reserves. That interest goes to Circle, which pays Coinbase and other partners; any rewards users receive come from platforms, not reserves. Circle publishes third-quarter results on November 4.
