Circle asks SEC to align Regulation Crypto Assets with GENIUS payment-stablecoin rules

Circle Internet Group submitted a comment letter to the U.S. Securities and Exchange Commission on October 20 asking the agency to coordinate its proposed Regulation Crypto Assets with the GENIUS Act's payment-stablecoin regime, including treating qualifying payment stablecoins as cash under proposed Rule 302(b) and cutting the current 2% broker-dealer haircut to zero for GENIUS-compliant tokens [1][2]. The company published a blog summarizing that letter on October 28 [1]. Those are company requests in File No. S7-2026-27. They are not Commission decisions, and nothing in the public record for this desk says the SEC has adopted any of them [1][2].

In plain terms, Regulation Crypto Assets is the SEC's proposed tailored framework for certain crypto-asset offerings and investment contracts, captioned under Releases 33-11434 and 34-106150 [2]. A payment stablecoin, under the GENIUS framing Circle invokes, is a dollar-referenced token designed for payments and settlement by a permitted issuer. Circle's letter, signed by Christine Parker, Deputy General Counsel, Product, and Corey Then, Deputy General Counsel, Regulatory Strategy and Global Policy, says the firm supports a clear, technology-neutral framework while preserving U.S. capital-markets strengths [1][2]. The live story for business readers is the ask list, not a finished rule.

GENIUS coordination and cash treatment

Circle's first hardened ask is coordination. The letter says Regulation Crypto Assets should operate consistently with the GENIUS Act, distinguish the crypto asset underlying a covered investment contract from the payment stablecoin used to buy or settle it, and clarify that receiving a payment stablecoin as consideration should not make that stablecoin a second investment-contract asset or pull its issuer into the offering issuer's obligations [2]. It asks the Commission to define or cross-reference GENIUS "payment stablecoin" and "permitted payment stablecoin issuer" language, and to clarify that only GENIUS-compliant payment stablecoins may be used as consideration or settlement under the proposal, with eligibility timing, transition, and loss of eligibility addressed [1][2].

The second ask is cash treatment under proposed Rule 302(b). Circle asks the Commission to clarify that a GENIUS-compliant permitted payment stablecoin qualifies as "cash" for that rule and related offering mechanics, and that for a qualifying U.S.-dollar payment stablecoin redeemable one-for-one, offering consideration is measured by the corresponding dollar amount rather than a non-cash appraisal solely because payment is onchain [1][2]. The letter keeps investor-paid fees and issuer expenses distinct under footnote 114 and says a later transfer or conversion of received proceeds should not count as an additional sale [2]. The blog summarizes the same cash and dollar-valuation posture; the letter controls the Rule cites [1][2].

The 0% haircut ask, and what is not the haircut

Circle's third hardened ask sits in broker-dealer capital. The letter cites Trading and Markets staff FAQ treatment as an interim staff no-objection for a 2% haircut on broker-dealers' proprietary payment-stablecoin positions under Rule 15c3-1, and recommends reducing that haircut to zero for GENIUS-compliant payment stablecoins, incorporating statutory and objective criteria on redemption, reserve quality and liquidity, legal enforceability, safeguarding, and operational resilience [1][2]. The blog states the same ask: reduce the current 2% broker-dealer haircut to zero, subject to objective safeguards [1].

Separately in the same letter section, Circle also asks for Office of the Chief Accountant guidance on cash classification and a Rule 15c3-3 customer-reserve clarification for qualifying payment stablecoins [2]. The letter says those companion reforms should be coordinated with, not inferred from, Regulation Crypto Assets [2]. Do not read the 15c3-3 line as the haircut itself, and do not treat either ask as adopted.

Post-functional services, and a short technology-neutrality note

Circle's fourth hardened ask is about what counts as "essential managerial efforts" once a network or application is functional. As the letter recounts the proposal's commentary, services to secure, maintain, improve, or enhance a functional network, and representations to continue such services, would not constitute essential managerial efforts [2]. Circle asks that the final rule itself, not only the commentary, enumerate on a non-exclusive basis activities that do not constitute essential managerial efforts once functional, including maintaining a known validator set, and include a safe harbor confirming that describing a technical "roadmap" is not, by itself, a promise of essential managerial efforts when the description stays in enumerated categories and does not suggest that the crypto-asset's price or value depends on those efforts [1][2].

Supporting color, not a fifth hardened ask: letter section 1 backs a technology-neutral approach that can accommodate permissionless institutional networks with known validators, naming Circle's Arc as an example, and asks the Commission not to condition eligibility on a particular governance or validator model [1][2]. That is Circle's posture. It is not an SEC response.

The objection, and what would change the view

The objection is mechanical. A company comment letter is advocacy into an open rulemaking file. It does not change Rule 15c3-1, Rule 302(b), Rule 15c3-3, or the essential-managerial-efforts line until the Commission acts [2]. This desk invents no comment-file totals, peer-letter tallies, adoption odds, or final-rule text beyond what the letter itself cites [1][2]. The piece is distinct from the OCC GENIUS applications Federal Register correction and from other issuers' comments on the same proposal, including prior Hyperliquid Policy Center coverage on this desk.

Le Coin's view is that the mainstream business read is issuer infrastructure policy: Circle wants GENIUS-compliant payment stablecoins recognized as the settlement and cash lane inside Regulation Crypto Assets, with a zero haircut ask under Rule 15c3-1 subject to objective safeguards, and a clearer post-functional technical-services boundary in the final rule rather than only in commentary [1][2]. What would change the view is a Commission release that adopts, modifies, or rejects those asks in File S7-2026-27, or a staff FAQ that hardens the haircut or cash treatment beyond the interim 2% posture Circle describes [2]. Until then, the checkable public record is the October 20 letter and Circle's October 28 blog summarizing it [1][2].

Sources

1. Circle, "Circle Submits Comment Letter on SEC's Proposed Regulation Crypto Assets," Oct. 28, 2026, https://www.circle.com/blog/circle-submits-comment-letter-on-secs-proposed-regulation-crypto-assets ; blog dated Oct. 28 publicizing Oct. 20 letter; technology-neutral framework; GENIUS Act coordination; GENIUS-compliant payment stablecoins as consideration/settlement; "cash" for proposed Rule 302(b) and dollar-based valuation; reduce current 2% broker-dealer haircut to zero subject to objective safeguards; post-functional technical services including maintaining a known validator set ≠ essential managerial efforts; safe harbor for technical roadmaps; Team Circle; accessed Oct. 28, 2026, ~11:24 a.m. ET.
2. Circle Internet Group, Inc., Comment Letter to Vanessa A. Countryman, Secretary, U.S. Securities and Exchange Commission, Re: Regulation Crypto Assets; File No. S7-2026-27; Releases 33-11434 and 34-106150, Oct. 20, 2026, https://www.sec.gov/comments/S7-2026-27/s7202627-1110319-3937607.pdf ; letter dated Oct. 20; commenter Circle Internet Group, Inc., One World Trade Center, New York, NY 10007; §§1–5 technology neutrality / known validators / Arc; GENIUS alignment / only GENIUS-compliant payment stablecoins as consideration or settlement; cash under proposed Rule 302(b) and dollar valuation; Rule 15c3-1 reduce 2% haircut to zero for GENIUS-compliant payment stablecoins with objective criteria; companion OCA/accounting and Rule 15c3-3 customer-reserve clarify coordinated with not inferred from Reg Crypto Assets; post-functional enumerate in final rule including maintaining known validator set + roadmap safe harbor; signatories Christine Parker, Deputy GC Product, and Corey Then, Deputy GC Regulatory Strategy and Global Policy; accessed Oct. 28, 2026, ~11:24 a.m. ET.

Holding the Corner.

Not financial advice.