X

SEC Offers Updated Guidance on Treatment of Payment Stablecoins

"I appreciate the staff’s approach. ... Stablecoins are essential to transacting on blockchain rails. 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."
Hester Peirce, SEC Commissioner
"I appreciate the staff’s approach. ... Stablecoins are essential to transacting on blockchain rails. 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."
Hester Peirce, SEC Commissioner

The SEC’s Division of Trading and Markets (the Division) updated guidance on the net capital treatment of proprietary positions in payment stablecoins.

The Division added a new FAQ to its overall guidance on Crypto Asset Activities and Distributed Ledger Technology. In new Question 5, the Division clarified net capital calculations under Exchange Act Rule 15c3-1 ("Net capital requirements for brokers or dealers"). The Division stated it will not object if a broker-dealer treats a proprietary position in a payment stablecoin as having a "ready market." For these positions, broker-dealers may take a haircut of 2% of the market value of the greater of the long or short proprietary position in the payment stablecoin when calculating net capital.

The broader FAQ framework addresses a range of crypto-related regulatory issues. These include broker-dealer custody under Rule 15c3-3 ("Customer protection-reserves and custody of securities"), SIPA protections, capital treatment of other proprietary crypto positions, transfer agent use of distributed ledger technology, and regulatory considerations for crypto asset trading platforms. (See previous coverage.)

 

Primary Sources

  1. SEC: Division of Trading and Markets: Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology
  2. SEC: Statement: Cutting by Two Would Do

Related Articles

  • SEC Adds FAQs on Crypto Pairs Trading and ATS Operations

    The SEC Division of Trading and Markets issued new guidance on the regulatory treatment of security/non-security crypto asset pairs trading, alternative trading system disclosures, and clearing agency registration requirements. 

  • SEC Updates Guidance to Facilitate Broker-Dealer Involvement in Crypto

    The SEC Division of Trading and Markets​​​​​​​ updated FAQs clarifying broker-dealer obligations and regulatory considerations for crypto asset activities and distributed ledger technology. The Division and FINRA's Office of General Counsel also withdrew a 2019 Joint Statement regarding broker-dealer custody of digital asset securities.

    Steven Lofchie Commentary by Steven Lofchie

Premium Content

Available only to Premium subscribers.

 

Join Premium

US Regulatory Intelligence combines regulatory and enforcement news, analysis, and practical work tools on an easy-to-use digital platform.

Request a Free Trial

Tags

Individuals
Hester Peirce
Regulated Activities
Capital Distribution Procedures Trading
Sub-Activity
Regulation M
Regulated Entities
Broker-Dealers Markets
Sub-Entity
Exchanges / Contract Markets
Regulated Products
Digital Assets
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
SEC
Sub-Author
SEC Trading & Markets