Crypto: Sec Allows Broker-dealers To Take 2% 'haircut' On Stablecoins
Staff said the US regulator would "not object" to broker-dealers counting stablecoin holdings toward their net capital requirements.
The US Securities and Exchange Commission (SEC) staff last week clarified that broker-dealers can apply a 2% “haircut” to their stablecoin holdings without objection from the SEC.
Previously, broker-dealers were uncertain whether to apply a 100% haircut to their dollar-pegged stablecoins, meaning that they did not count the tokens toward their net capital under existing regulations.
The clarification came in the form of a posting by the staff of the SEC’s Division of Trading and Markets as a “Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology.”
In response, Commissioner Hester Peirce said: In my view, a 100% haircut would be unnecessarily punitive given the underlying reserve assets that back payment stablecoins.”
The SEC requires broker-dealers to maintain minimum levels of net capital to meet financial obligations and absorb potential losses from market downturns and volatility, according to the staff’s clarification.
For example, if a broker-dealer holds $100 million in stablecoins, a 2% haircut allows them to count $98 million toward their net capital requirements. Celebrating the clarification as positive for the financial system, Peirce said:
The clarification means broker-dealers can hold stablecoins without worrying about excess net capital requirements, and can treat the tokens similarly to money market funds, vehicles that hold low-risk cash equivalents like US Treasurys and certificates of deposit.
In a social media post over the weekend, Marc Baumann, CEO of crypto intelligence company 51, called the SEC staff communication “a big deal,” adding that “Wall Street can now actually hold and use stablecoins without destroying their capital ratios.”
Related: SEC leaders seek to clarify how tokenized securities interact with existing regulation
Source: CoinTelegraph
