Circle Submits Comment Letter on SEC's Proposed Crypto Asset Regulation

On October 28, Circle submitted comments to the U.S. Securities and Exchange Commission (SEC) regarding the proposed crypto asset regulation. Circle supports the proposal's goals to promote innovation under clear rules while maintaining the advantages of U.S. capital markets, including transparency, investor protection, market integrity, liquidity, and efficiency. Circle recommends that the crypto asset regulation be aligned with the GENIUS Act and requests that the SEC clarify how payment stablecoins that comply with the GENIUS Act can be used for on-chain capital formation and settlement of assets. The letter asks the Commission to clarify that eligible payment stablecoins constitute "cash" under proposed Rule 302(b), should receive appropriate U.S. dollar valuation treatment, and comply with the corresponding accounting and customer reserve handling conditions. Circle also suggests reducing the 2% broker discount for payment stablecoins that meet GENIUS requirements to zero, provided that objective safeguards are in place. Finally, Circle requests that the SEC clarify that technical services provided after the network goes live do not constitute necessary management work and recommends establishing safe harbor rules to allow issuers to continue maintaining and improving the operational network without inadvertently restarting the relevant analysis.

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