SEC Stablecoin Regulation: From 100% Collateral Guarantee to 2%, Innovation in Institutional Capital Allocation

The U.S. Securities and Exchange Commission (SEC) recently updated its FAQs, announcing that compliant “payment stablecoins” can be treated with a 2% discount rate under the net capital rule. This change signifies a fundamental shift in the cost of maintaining collateral. SEC Commissioner Hester Peirce immediately issued a statement saying that stablecoins are finally recognized in regulatory capital calculations as near low-risk cash instruments, moving away from nearly unusable assets. This seemingly technical policy adjustment actually greatly reduces the cost for Wall Street institutions to access on-chain capital markets.

Regulatory Reassessment: How the Discount Rate Defines Asset Value

The discount rate essentially reflects how regulators price the risk of assets. To prevent broker-dealer failures, regulators require them to maintain sufficient net capital reserves. When calculating net capital, assets cannot be valued at 100% of market price; they must be discounted based on risk levels.

Previously, a 100% discount rate for stablecoins meant regulators viewed them as extremely high-risk assets, effectively valuing them at zero. For example, if a broker-dealer holds $1 million in stablecoins, they not only need to purchase them with $1 million in capital but also must hold an additional $1 million in cash as reserves to meet regulatory requirements. This structure imposes a huge burden on institutions holding stablecoins.

The new policy adjusts the discount rate to 2%, recognizing stablecoins as highly secure, with an actual value of 98%. Thus, the same $1 million in stablecoins would require only $20,000 in collateral. This adjustment increases capital efficiency by 50 times—institutions no longer need to hold large collateral buffers to hedge stablecoin risks.

How Collateral Costs Influence Institutional Decisions

This policy change directly reduces the cost for institutions to maintain collateral. Previously, a 100% discount rate made holding stablecoins a losing proposition: capital used for stablecoins had the lowest efficiency, prompting institutions to prefer traditional money market funds (MMFs), which enjoy the same 2% discount rate.

Post-reform, the burden of maintaining collateral disappears, making stablecoins an attractive option. Major firms like Goldman Sachs, JPMorgan Chase, and Robinhood can now allocate based on their operational needs without worrying about excessive capital consumption. In scenarios where settlement efficiency is critical—such as the 24/7 tokenized US stock trading launched by the New York Stock Exchange—institutions can use stablecoins for instant settlement and collateral transfer without being constrained by additional collateral costs.

Who Will Benefit from the Stablecoin Discount Rate Adjustment

The immediate beneficiaries are compliant payment stablecoins, especially those recognized under the U.S. Stablecoin Act. USDC (currently priced at $1.00) and USD1 (currently priced at $1.00) are within the regulatory scope and may expand their market presence under regulatory approval.

On the institutional level, regulated financial entities have historically been forced to adopt a passive stance toward stablecoin holdings. Now, with collateral costs significantly lowered, they can actively allocate stablecoins to support on-chain business expansion. In RWA (Real-World Asset) tokenization and on-chain settlement, capital constraints are eased, enabling more resources to be invested in developing innovative business models.

From “Staff-Level” Guidance to Formal Regulations

It is important to note that this adjustment is currently at the SEC staff level as a “no objection” stance and has not yet become formal regulatory rules. Legal certainty will depend on subsequent rulemaking processes.

Additionally, not all stablecoins qualify for the discount rate adjustment. Only those compliant stablecoins recognized under the U.S. Stablecoin Act can enjoy this treatment. Unapproved stablecoins will still need to maintain the original high discount rates and collateral requirements.

A Turning Point for Institutional Prosperity

The true significance of this policy is not in short-term price fluctuations but in improving the balance sheets of institutions. Whether stablecoins can achieve systemic expansion depends less on on-chain trading activity and more on their status within compliant financial institutions’ asset allocations.

Under the previous 100% discount rate, stablecoins were effectively invisible on institutional balance sheets. The new 2% rate restores their role as low-risk cash equivalents, drastically reducing collateral costs. If this framework is eventually codified into official rules, it will mark the beginning of genuine institutional prosperity for stablecoins. Wall Street funds will be able to operate on-chain with lower compliance costs, bringing transformative changes to the entire on-chain financial ecosystem.