The SEC Just Slashed Stablecoin Capital Charges From 100 Percent to 2 Percent, and Broker-Dealers Are Already Circling

For years, holding stablecoins on a broker-dealer's balance sheet was the financial equivalent of stuffing cash under a mattress and then pretending it did not exist. The SEC's 100% capital haircut meant that every dollar of USDC or USDT a firm held counted as zero toward its net capital requirements. As of February 20, 2026, that penalty is over.

The 100% Haircut That Froze an Industry

The SEC added a new FAQ, Question No. 5, to its "Broker Dealer Financial Responsibilities" guidance document. The change is surgical but seismic: stablecoins now receive a 2% haircut instead of 100%. That means broker-dealers can count 98% of their stablecoin holdings as regulatory capital, up from literally nothing.

To put the magnitude in perspective, the old rule treated stablecoins worse than junk bonds, distressed debt, or volatile equities. A broker-dealer holding $100 million in USDC had to pretend that $100 million did not exist when calculating whether it met SEC net capital thresholds. Now it can count $98 million. That is not a tweak. That is a 50x improvement in balance sheet efficiency, as of the time of writing.

The source of the change: CoinDesk's policy report covering the updated FAQ guidance.

Why Staff Guidance Carries More Weight Than It Should

This was not a formal rulemaking. No comment period, no Congressional hearing, no Federal Register publication. The SEC's staff simply added a new FAQ question to existing guidance. That distinction matters for two reasons.

First, it can be reversed just as quietly. A future administration or a shift in SEC leadership could rewrite the FAQ without going through the Administrative Procedure Act. Market participants building strategies around this change should understand it sits on a less durable legal foundation than a codified rule.

Second, it reveals how much of crypto policy has been made through informal channels. The SEC's previous crypto accounting guidance, SAB 121, was also staff-level. It took a Congressional resolution and a presidential veto to even challenge it. The pattern is clear: in the absence of comprehensive legislation like the Clarity Act, staff guidance fills the vacuum.

SEC Commissioner Hester Peirce issued a statement noting the change "will make it feasible for broker-dealers to engage in a broader range of business activities relating to tokenized securities and other crypto assets." That framing is deliberate. Peirce has long argued that overly punitive accounting treatment was the primary barrier keeping traditional finance from touching digital assets.

What 98% Capital Recognition Actually Unlocks

The practical implications cascade through several layers of financial infrastructure.

Custody and settlement. Broker-dealers can now hold stablecoins as working capital for settlement without destroying their net capital ratios. This is critical for firms like Robinhood and Goldman Sachs that want to settle tokenized securities in real time using USDC or USDT rather than waiting for T+1 (or T+2) fiat settlement.

Liquidity provision. Market makers on crypto trading platforms need stablecoin reserves to provide liquidity. Under the old regime, those reserves were a pure cost center from a regulatory capital standpoint. Now they contribute to the firm's financial health metrics. Expect stablecoin liquidity depth on regulated venues to increase.

Tokenized securities. This is the connection Peirce emphasized. The SEC's EthDenver signals around tokenized securities and innovation exemptions suddenly have a complementary infrastructure piece. If broker-dealers can hold stablecoins efficiently, they can also settle tokenized stocks, bonds, and fund shares denominated in stablecoins without the capital penalty.

Tonya Evans, a prominent digital assets legal scholar, summarized it plainly: "Stablecoins are now treated like money market funds on a firm's balance sheet. Holding them was a financial penalty. That is over."

The Stablecoin Market Is Already Responding to Policy Shifts

This guidance lands in a market that is already expanding rapidly. Circle printed $2.6 billion in USDC in a single week in mid-February, pushing total USDC supply past $73 billion. Tether's USDT dominates with over $130 billion in circulation. Together, the two stablecoins referenced in the SEC's updated FAQ represent more than $200 billion in combined market capitalization.

The timing is also notable. ProShares just launched IQMM, the first money market ETF designed specifically to serve as stablecoin reserve backing under the proposed GENIUS Act. The White House has been pushing stablecoin yield legislation through tense meetings with banking lobbies. And the Clarity Act continues to wind through Congress.

The SEC's FAQ change fits into a broader pattern: the regulatory infrastructure for stablecoins is being built piece by piece, through staff guidance, ETF approvals, and legislative drafts, even without a single comprehensive law.

What Crypto Card Users and Holders Should Watch

For everyday crypto users, the change is not immediately visible but it reshapes the plumbing beneath the services they use.

Broker-dealers that offer stablecoin spending through card programs now face lower capital costs for holding the stablecoins that fund those transactions. Over time, this could translate to better rates, lower spreads on conversions, or expanded stablecoin support on platforms that previously avoided the asset class due to regulatory overhead.

The bigger impact is on institutional adoption. If Goldman Sachs, Morgan Stanley, or JP Morgan can hold USDC at a 2% haircut instead of 100%, the business case for offering stablecoin custody, stablecoin-denominated trading, and stablecoin settlement becomes dramatically more attractive. More institutional players holding stablecoins means deeper liquidity, tighter spreads, and more integration points between traditional finance and crypto rails.

For users of self-custody cards and non-custodial wallets, the shift is less direct but still relevant. More broker-dealer participation in stablecoin markets means more fiat on-ramps and off-ramps, more competition among service providers, and ultimately a more robust ecosystem for converting between stablecoins and local currencies.

The Risk Nobody Is Pricing In

The reversibility concern deserves emphasis. Staff guidance is not law. It is not even a formal regulation. The same SEC staff that added Question No. 5 could modify or remove it with minimal procedural requirements.

This creates a "regulatory rug pull" risk for firms that commit capital based on the new treatment. If the political winds shift, if a crypto blowup triggers public backlash, or if a new SEC chair takes a harder line, the 100% haircut could return. Broker-dealers planning multi-year strategies around stablecoin custody need to weigh this uncertainty.

The ideal outcome would be Congress codifying the 2% (or similar) haircut in legislation, giving broker-dealers the legal certainty they need to build durable infrastructure. The GENIUS Act and Clarity Act both touch on stablecoin treatment, but neither has passed yet.

FAQ

Does this mean regular people can now earn yield on stablecoins at their brokerage? Not directly. The change affects how broker-dealers account for stablecoins internally, not what products they offer to retail customers. However, it removes a major economic barrier that previously made stablecoin products unattractive for brokerages to offer.

Which stablecoins qualify for the 2% haircut? The SEC's guidance references USDC and USDT specifically. Whether other stablecoins like DAI, FRAX, or PYUSD qualify under the same treatment is not yet clear and may require additional staff guidance.

Can the SEC reverse this change without warning? Yes. Because this is staff-level guidance (an FAQ addition), it can be modified without a formal rulemaking process. This is both its strength (speed of implementation) and its weakness (lack of durability).

How does this compare to how banks treat stablecoins? Banks operate under different regulatory frameworks (OCC, FDIC, Fed) with their own capital rules. The SEC's change applies specifically to SEC-registered broker-dealers. Bank treatment of stablecoins remains a separate, ongoing policy discussion.

Overview

The SEC's quiet addition of FAQ Question No. 5 transforms the economics of stablecoin custody for broker-dealers, dropping the capital haircut from a punitive 100% to a manageable 2%. While the change arrives through informal staff guidance rather than legislation, its practical impact is immediate: firms like Robinhood and Goldman Sachs can now hold USDC and USDT without destroying their net capital ratios. The shift aligns with Commissioner Peirce's push to make tokenized securities viable and lands in a market already processing billions in weekly stablecoin issuance. The risk is durability. Staff guidance can be reversed as easily as it was issued, and the crypto industry's long-term need for Congressional codification remains unmet. For now, the 98% capital recognition is the single most consequential accounting change for crypto since the SEC issued SAB 121.