Circle urges SEC to remove 2% capital haircut o... - Pluang

Circle, the issuer of the USDC stablecoin, has reportedly urged the U.S. Securities and Exchange Commission to remove a 2% capital haircut applied to stablecoin holdings. The request centers on how regulated firms must treat stablecoin reserves on their balance sheets for capital purposes. Under a haircut, a firm holding stablecoins must set aside capital as if part of that value were at risk, which raises the effective cost of holding the asset.

The market relevance lies in how such rules shape institutional participation. A 2% haircut may appear small, but for firms that hold stablecoins at scale for settlement, collateral, or liquidity management, it can translate into a meaningful capital charge. Lowering or removing it could make stablecoins more capital-efficient to hold and potentially broaden their use in regulated financial workflows.

What to watch: whether the SEC responds formally, and whether other regulators revisit similar treatment. Any change would signal how policymakers view stablecoin risk relative to other assets — a question with implications beyond Circle's own business.