Stablecoins Clear Major Regulatory Barrier as SEC Revises Capital Rules

TLDR:

• The SEC reduced the stablecoin capital haircut from 100% to 2%, in line with money market fund treatment. 
• Broker-dealers previously needed $2 million in capital reserves just to hold $1 million in stablecoins. 
• The rule change allows regulated firms to use stablecoins for settlement, collateral, and tokenized assets. 
• Lower capital requirements are expected to drive broader institutional demand and stablecoin adoption in 2026.

Stablecoins have cleared a major regulatory hurdle in 2026. The U.S. Securities and Exchange Commission revised capital treatment rules for broker-dealers holding stablecoins.

Previously, firms faced a 100% haircut on stablecoin holdings, making institutional use prohibitively costly. The SEC now aligns stablecoin treatment with money market funds at a 2% haircut.

This change removes a long-standing barrier for regulated institutions looking to adopt stablecoins in daily operations.

SEC Cuts Capital Burden on Broker-Dealers

Under the old framework, broker-dealers faced a steep capital penalty for holding stablecoins. A 100% haircut meant every dollar in stablecoins required an equal dollar set aside.

A firm holding $1 million in stablecoins effectively locked up $2 million in balance sheet capacity. That structure made stablecoins costly and unattractive for regulated financial institutions.

This arrangement gave Wall Street little reason to integrate stablecoins into daily operations. The capital cost far outweighed any operational benefit stablecoins could realistically offer.

Consequently, traditional finance largely stayed away from stablecoin use under these rules. Regulated broker-dealers could not incorporate them without visibly straining their capital ratios.

Crypto market commentary account Bull Theory addressed the change directly in a post. “The SEC has changed the rules, which forced Wall Street to need $2 million in capital to hold $1 million in stablecoins,” the account stated.

The revised haircut now stands at 2%, consistent with money market fund treatment. Firms now set aside only a small buffer rather than freezing the full amount.

This correction makes stablecoins balance sheet friendly for the first time under U.S. regulatory rules. Broker-dealers can now hold stablecoins without straining their capital positions or compliance standings.

The change applies broadly across regulated institutions operating in traditional finance. It stands as one of the most practical regulatory adjustments for crypto in 2026.

Stablecoin Integration Into Traditional Finance Now More Viable

With the capital burden reduced, broker-dealers can bring stablecoins into everyday institutional workflows. Settlement, collateral transfers, and tokenized treasury transactions all become accessible for regulated firms.

These are standard financial functions that previously excluded stablecoin participation entirely. The revised rule opens those operational pathways directly to Wall Street.

Stablecoins have long served as the bridge between traditional finance and crypto markets. That bridge becomes far more functional when institutions can cross it without a capital penalty.

Greater institutional participation strengthens stablecoins as core financial infrastructure over time. Demand grows as more firms incorporate stablecoins into routine operations.

More demand for stablecoins also supports broader crypto market activity going forward. Settlement becomes more efficient when institutions move stablecoins freely across platforms.

On-chain transactions grow more practical for regulated entities operating at meaningful scale. The crypto market gains a more reliable and institutional-grade liquidity layer as adoption expands.

This regulatory shift did not expand the risk profile of crypto for institutions. Rather, it corrected a disproportionate treatment inconsistent with comparable low-risk financial instruments.

Stablecoins backed by short-term assets were previously treated far more harshly than similar products. The 2% haircut now aligns regulatory treatment with the actual financial risk stablecoins carry.

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