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The Securities and Exchange Commission (SEC) of the United States has paved the way for Wall Street to integrate stablecoins into traditional finance.
On February 19, the financial regulator published guidelines allowing brokers and traders to apply a 2% “haircut” to payment stablecoin positions. The discount is the percentage of the asset value that a financial institution cannot count towards its deployable capital, as it acts as a buffer to protect clients against market risks.
SEC Stablecoin Shift Puts Pressure on Brokers to Build Crypto Rails
Previously, brokers and traders faced a punitive 100% cut on stablecoins. If a financial company has a million digital dollars to facilitate quick liquidation in the chain, it must reserve that capital.
This requirement has made institutional trading of digital currencies an economic boon for traditional financial institutions.
By reducing the capital penalty to 2%, the SEC granted… Compatible stablecoins have the same economic treatment as traditional money market funds.
“This is another big step in the right direction by our team in the Division of Trading and Markets to remove barriers and open access to on-chain markets,” said SEC Chairman Paul Atkins.
Interestingly, this change is firmly founded On the new GENIUS Act that was passed. This is a federal regulatory framework for payment stablecoins in the United States. It enforces a 1:1 backup and increases anti-money laundering (AML) compliance.
SEC Commissioner Hester Peirce noted that the new legislation imposes strict reserve requirements for stablecoin issuers.
According to her, these requirements are stricter than those applied to the money market funds of the government, which justifies a reduction of the capital penalty.
“Stablecoins are essential for transactions on blockchain lines. The use of stablecoins will allow brokers and traders to engage in a wider range of trading activities related to tokenized securities and other digital assets.” He added Pierce.
In view of this, US regulated entities can attest Like Circle’s USDC High reliance on companies in the $6 trillion revenue sector.
As a result, industry leaders were quick to celebrate With the changing fortunes of the digital asset industry.
Exodus CEO JP Richardson described it as the most significant cryptocurrency win of the year. He argued that it makes the tokenized Treasuries, shares, and liquidation on the chain “economically viable overnight”.
“This puts pressure on every major broker and trader to build a stablecoin infrastructure or fail behind those who do. Because now their competitors can and there is no longer a death penalty that makes it uneconomic.” explain.
Meanwhile, this continues Approval of the current set of pro-cryptocurrency regulations imposed by the Securities and Exchange Commission (SEC).).
In the past year, the SEC launched a Digital Assets Task Force and launched a “Cryptocurrency Project” to update its rules. These efforts aim To make the United States the digital currency capital of the world.
