SEC Division Clears Security Token-Bitcoin Pairs, Sets 2% Stablecoin Haircut

The SEC Division of Trading and Markets issued updated guidance clarifying that national securities exchanges and alternative trading systems may facilitate direct trading between a crypto asset security and a nonsecurity crypto asset, such as Bitcoin, without first converting to fiat, the Division said. On broker-dealer capital requirements under Rule 15c3-1, the Division said it would not oppose a broker-dealer treating its proprietary holdings in a payment stablecoin as readily marketable and applying a 2% haircut to the market value of its larger long or short proprietary stablecoin position when calculating net capital. The guidance also covers broker-dealer operations and crypto exchange-traded products: a broker-dealer that operates an alternative trading system may combine brokerage, custody, and clearing functions so long as each activity independently complies with federal securities laws, and the Division would not object to transactions in crypto ETP shares under circumstances similar to the SEC staff 2006 Regulation M no-action letter if the shares are listed on a national securities exchange and participants avoid conduct that would violate Regulation M outside a permitted distribution.