[Digital Today intern reporter Seung-ah Yoo] Stablecoin issuer Circle asked the U.S. Securities and Exchange Commission to treat payment stablecoins that meet regulatory requirements as equivalent to cash in securities markets. The company aims to widen the use of its stablecoin, USDC, in institutional financial markets.

In a statement Circle released on Oct. 28, the company said that in a comment letter it submitted to the SEC on Oct. 20 it proposed institutional improvements in three areas: securities offerings, brokers’ regulatory capital calculations and customer reserve accounts.

The request was included in a comment letter on the SEC’s proposed Regulation Crypto Assets. The proposal provides a framework to exempt some cryptoasset issuances from securities registration requirements, including raising up to $5 million over 4 years and raising up to $75 million annually.

Circle argued that payment stablecoins that meet the requirements of the GENIUS Act should be recognised as cash in those offerings. The SEC proposal would allow permitted stablecoins to count toward the amount raised, but Circle asked for clarity so that issuers can use them under the same procedures as cash when received. It said different rules should not apply from bank transfers simply because payment was received in blockchain-based dollar tokens.

Circle also stressed that qualified stablecoins that are exchangeable one-for-one with the dollar should be recognised at their dollar value at par. It also said securities-related obligations should not be imposed on the token or the issuer solely because a stablecoin was accepted as a means of payment.

How Wall Street brokers calculate regulatory capital is also a key request. Under SEC staff guidance, broker-dealers can deduct 2 percent of their holdings when calculating net capital for qualified stablecoins held in proprietary accounts. For example, holding $1 billion in stablecoins reduces regulatory net capital by $20 million. Circle requested that this deduction rate not apply to payment stablecoins that meet the GENIUS Act requirements.

The current 2 percent deduction is not a rule adopted by the SEC commission but is based on non-binding staff guidance. Lowering it to 0 percent would require additional recognition by the SEC, and the actual impact could vary depending on the amount of stablecoins held by brokers.

Customer asset protection rules were also presented as an area for improvement. The current rule, Rule 15c3-3, requires broker-dealers to hold cash or qualified securities in a reserve account to protect customer funds. Circle asked for clarification on whether compliant payment stablecoins can also be recognised as such reserves.

Circle believes that the GENIUS Act provides a basis for recognising qualified stablecoins as payment and settlement instruments because it establishes a framework for stablecoin issuance, reserves, redemption and oversight. Still, the existence of regulatory requirements for issuers does not automatically mean stablecoins will be treated the same as cash under all rules in securities markets. Whether the SEC moves to set up separate rules is expected to affect the spread of stablecoins, including USDC, in institutional financial markets.