On February 19, 2026, the Securities and Exchange Commission’s (“SEC”) Division of Trading and Markets issued a new FAQ clarifying how broker-dealers should treat payment stablecoins under the net capital rule (Exchange Act Rule 15c3-1). (SEC Division of Trading and Markets, Frequently Asked Questions Relating to Crypto Asset Activities & Distributed Ledger Technology (Feb. 19, 2026)). Commissioner Hester M. Peirce, who chairs the agency’s Crypto Task Force, released an accompanying statement titled “Cutting by Two Would Do,” explaining that the SEC staff will not object if broker-dealers apply a 2% haircut, rather than a punitive 100% haircut, on proprietary positions in qualifying payment stablecoins when calculating net capital. (Statement of Comm’r Hester M. Peirce, “Cutting by Two Would Do” (Feb. 19, 2026)). While the adjustment may appear arcane, it may be one of the most consequential moves the SEC has made for the practical integration of digital assets into mainstream finance.
The 2% Haircut: What It Means and Why It Matters
The Exchange Act Rule 15c3-1 requires every broker-dealer to hold a minimum amount of liquid capital as a financial buffer to safeguard customers. (FINRA, 2026 Annual Regulatory Oversight Report: Net Capital). As part of this calculation, firms must discount asset values through “haircuts,” with larger deductions applied to more volatile holdings. Without explicit guidance, many broker-dealers had voluntarily applied a 100% haircut to stablecoin inventories, rendering those assets economically impractical for any regulated firm. (Statement of Comm’r Hester M. Peirce, “Cutting by Two Would Do,” n.2 (Feb. 19, 2026)).
Reducing the haircut to 2% gives payment stablecoins the same capital treatment as money market funds—instruments backed by comparable reserve assets, including U.S. Treasury securities, cash equivalents, and short-duration government obligations. (Id.). By making it feasible for broker-dealers to carry stablecoin balances without neutralizing their capital, the guidance opens the door to deeper engagement in tokenized securities trading, in-kind ETP transactions, and the suite of combined crypto-and-traditional services that institutional clients are seeking.
Alignment with the GENIUS Act
This guidance does not arrive in isolation. President Trump signed the GENIUS Act on July 18, 2025, establishing the first comprehensive federal statutory regime governing payment stablecoins. Multiple agencies are now working to operationalize the law, with a July 2026 deadline for key implementing regulations driving urgency across the federal regulatory landscape.
The SEC’s FAQ features a two-phase definition of “payment stablecoin” designed to function both before and after the GENIUS Act becomes operative, allowing broker-dealers to rely on the favorable capital treatment immediately. (Id.).
Practical Implications and Looking Ahead
For financial institutions, the guidance offers immediate clarity. Firms deterred by maintaining large positions with zero capital credit can now revisit those calculations. Custodians, clearinghouses, and ATS operators developing tokenized settlement infrastructure can proceed knowing the settlement currency will not be a dead-weight drag on their capital. These developments also benefit retail participants: as the IMF has documented, stablecoins play an important role in cross-border remittances and serve as gateways for underbanked populations. (IMF Blog, “How Stablecoins Can Improve Payments and Global Finance” (Dec. 4, 2025)). Commissioner Peirce made clear that this FAQ is a starting point, not a destination, inviting market participants to submit views on formal amendments to Rule 15c3-1. (Statement of Comm’r Hester M. Peirce, “Cutting by Two Would Do” (Feb. 19, 2026)). Significant friction persists as state regulators face a tight compliance deadline, consumer protection concerns remain unresolved, and Congress has yet to pass companion market structure legislation. Still, the 2% haircut guidance reflects a federal securities regulator that is no longer content to tolerate stablecoins at arm’s length but is actively retooling its rules to treat them as working components of the financial system.
