The SEC 'Guides' Toward Crypto Adoption and Signals a Capital Friendly Future

On February 19, 2026, the SEC's Division of Trading and Markets issued a series of FAQs with a follow-up statement from SEC Commissioner and Crypto Task Force Leader Hester Peirce. Below, we analyze and comment on the FAQs and their implications for both the digital asset and blockchain markets and for regulatory policy. We believe, however, there are two significant themes worthy of close attention.

First, the FAQs and Commissioner Peirce's statement confirm that the Commission is continuing its practice of providing broad direction and information to the crypto industry by way of "non-rules based" guidance, which can be found in FAQs, statements, speeches, etc. We believe that this effort is intended to bridge the gap between the Administration's intent to move swiftly in order to make the U.S. the "crypto capital of the world," and the amount of time that it takes (properly so) to promulgate and finalize rules and legislation. This phenomenon is not unknown (the prior Administration used such guidance extensively), but it is rare for there to be such an organized and well-thought-out effort as part of the "pre-build" of a body of regulation. At a minimum, the industry is likely to respond in a manner that will help the Commission build a robust administrative record before making rules. On the other hand, the Commission's Staff and the Crypto Task Force may be signaling a direction to the market before it is finalized, which carries risks of reversal and may enervate the statutory rulemaking process going forward. Not surprisingly, the industry reaction was generally favorable. For example, the general counsel of a major exchange posted: "This is what progress in regulation looks like sometimes. Not flashy. Even workmanlike. But real progress." But there are risks going either way. Go slow and get left behind by a market moving at warp speed. Go fast and run the risks of mistakes and weakening a process intended by Congress (albeit 80 years ago) to be deliberate.

Second, a significant building block for potential U.S. dominance in crypto is the development of "friendly" capital rules. For example, in the Capital Standards as part of the overall Basel Framework that were promulgated in 2022 and finalized in 2024 (SCO60), the Basel Committee on Bank Supervision ("BCBS") described two groups of crypto assets held by banks that have significantly different treatment. The Standards detail requirements that must be met in order for banks (and their broker dealer subsidiaries) to benefit from a preferential treatment for stablecoin holdings and set out new disclosures for crypto holdings and liabilities. Stablecoins fall within the class of assets denominated as Group 1b. Even with preferential treatment, however, such assets must account for different credit and market risks including with respect to the issuers (or other party satisfying a redemption request) and to the intermediary carrying out the redemption function. European regulators also can impose a capital add-on for Group 1 exposures if needed. In addition, BCBS is studying whether there are statistical tests that can reliably identify low risk stablecoins and, if identified, will consider it as an additional requirement for including in Group 1b. BCBS also agreed that a supervision/regulation requirement should apply in addition to the requirement to pass the redemption risk test.

By comparison, the FAQs make it clear that when broker-dealers are holding stablecoins, they only need to take a 2% haircut as opposed to the 100% haircut against these assets that many broker-dealers were taking to ensure they complied with the SEC's Customer Protection Rule. While the FAQs are not a rule, this aspect should give significant clarity and comfort to broker-dealers who wish to hold stablecoins on their balance sheet. Moreover, it signals the friendly capital environment that the Administration intends to create for the U.S. once a full set of crypto rules are put in place governing banks, broker-dealers, futures commission merchants, and exchanges. One can refer back to the President's Working Group comments to see that the U.S. is signaling to the BCBS that the U.S. intends to craft a capital regime much more friendly to crypto than currently exists in Europe. "The United States should adopt capital requirements for bank digital asset activities that accurately reflect the risk of the asset or activity. Additionally, the United States should advocate that the BCBS revisit the crypto asset standards to ensure similar treatment to U.S. capital requirements." The message to the European community seems to be that they can (a) change their capital rules to reflect a more friendly posture, or (b) get left behind. As Warren Buffett famously said, "Capital goes where it is welcome and stays where it is well treated." Thus, we begin with analysis of the first set of FAQs on Broker-Dealer Financial Responsibility, particularly FAQ 5. 

The FAQs

The FAQs issued by the SEC's Trading and Markets Division Staff address a variety of issues confronting broker-dealers, transfer agents, and securities markets transacting in "crypto assets" and distributed ledger technology. The FAQs define a crypto asset as "an asset that is generated, issued, and/or transferred using a blockchain or similar distributed ledger technology network … and relies on cryptographic protocols," including tokenized versions of equity and debt securities. The FAQs significantly expand the ability of securities market participants to incorporate crypto assets and technology into their operations and is the latest expression from SEC Staff intended to "provide greater clarity on the application of the federal securities laws to crypto assets." See, e.g., Divisions of Corporation Finance, Investment Management, and Trading and Markets, "Statement on Tokenized Securities" (January 28, 2026), SEC.gov | Statement on Tokenized Securities.

Broker-Dealers

Rule 15c3-3 under the Securities Exchange Act of 1934 ("Exchange Act"), known as the Customer Protection Rule, requires broker-dealers that hold customer cash and securities to treat these assets in a manner that facilitates their prompt return to the customers if the broker-dealer fails financially. The goal of the rule is to "place a carrying broker-dealer in a position where it is able to wind down in an orderly self-liquidation without the need of financial assistance provided by the Securities Investor Protection Corporation ("SIPC") through a formal proceeding under SIPA." [Release 34-102022 (December 20, 2024), 90 FR 2790, 2791, 2024-31178.pdf.]

FAQ 1 declares that Rule 15c3-3 applies only to "securities" carried by a broker-dealer. Therefore, the rule does not apply to crypto assets that are not securities.

FAQ 2 addresses the concept of "control" of assets in Rule 15c3-3(c). Although the rule refers to securities in "certificated form," i.e., physical control, the Staff states that it will not object if crypto asset securities are not in certificated form when held at "control locations" specified in the rule, such as clearing corporations or banks. Accordingly, crypto assets that are evidenced on a blockchain and held at approved control locations will be deemed to be under the broker-dealer's control.

FAQ 3 clarifies that the SEC's 2020 statement "Custody of Digital Asset Securities by Special Purpose Broker-Dealers," Release 34-90788 (December 23, 2020), 86 FR 11627, 2020-28847.pdf, in which the SEC adopted a no-action position concerning registered broker-dealers that limited their business to "dealing in, effecting transactions in, maintaining custody of, and/or operating an alternative trading system for digital asset securities" does not constrain broker-dealers seeking to custody customer crypto assets that are securities. Many viewed this limitation of the scope of securities that the broker-dealers could transact and hold in custody as impractical and unworkable. The FAQ essentially negates the constriction of the 2020 Statement by noting that it did not amend any rules and, therefore, a broker-dealer carrying crypto assets securities "may establish control under paragraph (c) of Rule 15c3-3" as discussed in FAQ 2.

FAQ 4 addresses Exchange Act Rule 15c3-1 which requires a broker-dealer to hold sufficient liquid assets to support its business operations and allow an orderly winddown if the broker fails financially. The Staff states that the custody and capital requirements do not prohibit broker-dealers from facilitating in-kind creations and redemptions in connection with spot crypto exchange-traded products ("ETPs"). However, the broker-dealer must determine the value that it can assign under Rule 15c3-1 to their holdings of spot (i.e., non-security) crypto assets in connection with facilitating ETP creations and redemptions. Broker-dealers are not required to deduct from their inventory "readily marketable spot commodities." Here the Staff takes the position that bitcoin and ether may be deemed to be "readily marketable" assets for purposes of determining whether the 20% "haircut" applicable to commodities under the rule applies.

FAQ 5 is perhaps the most significant development and addresses the "haircut" that a broker-dealer should take for an asset that is a proprietary position in payment stablecoin. That term is defined with regard to the implementation of the "GENIUS Act" enacted in 2025, which becomes effective on or before January 18, 2027. Prior to the effective date, a payment stablecoin is defined as a USD-denominated stablecoin that is "issued by a state regulated money transmitter, state-regulated trust company, or a national trust bank" and that satisfies enumerated disclosure and valuation criteria. After the effective date, the stablecoin must satisfy the Act's definition of "payment stablecoin" issued by qualifying issuers.

For qualifying payment stablecoins, the Staff "will not object" if a broker-dealer treats a proprietary position in payment stablecoin as having a "ready market" under Rule 15c3-1 and takes a haircut of 2% of the market value in determining its net capital. This may be transformative for the participation of broker-dealers in the stablecoin business. In commenting on the Staff's issuance of the FAQs, SEC Commissioner Peirce's statement observed that some broker-dealers, "out of an abundance of caution," proposed to take a 100% haircut on payment stablecoins held in their inventory. If broker-dealers deem it necessary to take a 100% haircut, which assigns no value to the asset, it imposes a financial restriction on their ability to engage in transactions involving stablecoins. A 2% haircut will greatly facilitate their ability to transact with customers and for their own account in that asset. Although Rule 15c3-1 deals with a wide variety of securities, Commissioner Peirce notes that the Rule does not explicitly address payment stablecoins. Nevertheless, the Commissioner believes that a 2% haircut for payment stablecoins "aligns with the haircut imposed on registered investment companies that are money market funds." It may be noted, however, that the federal risk management regime applicable to money market funds is uniform and time-tested compared with the various state-regulated entities that would oversee a nascent payment stablecoin financial product.

FAQs 6, 7, and 8 deal with the application of the Securities Investor Protection Act of 1970 ("SIPA") to crypto assets. SIPA is designed to protect investors and provide for prompt return of customer assets when a broker-dealer fails financially. FAQ 7 notes that SIPA protections apply only to customer claims for "securities" as defined in SIPA that are entrusted to a SIPC member broker-dealer. FAQ 6 explains that crypto assets that are investment contracts treated as securities under the Exchange Act are not protected under SIPA if they are not the subject of a registration statement filed under the Securities Act of 1933. FAQ 8 discusses possible ways that a broker-dealer's customers' non-security assets could be returned to the customers if the broker-dealer becomes insolvent. The Staff notes that non-security crypto assets are not protected by SIPA and may not be protected by any other specific insolvency regime. However, a broker-dealer "may agree with its customers that non-security crypto assets custodied by the broker-dealer for the customers for purposes of Article 8 of the Uniform Commercial Code be treated as 'financial assets' and carried in a 'securities account,'" which "could help ensure that customer non-security assets do not become part of the broker-dealer's estate if the broker-dealer is placed in liquidation under SIPA or the Bankruptcy Code."

FAQ 9 discusses the integrity of records about a broker-dealer's non-security crypto asset business. Broker-dealers have extensive recordkeeping requirements, see, e.g., Exchange Act Rules 17a-3, 17a-4, and 17a-5. After noting that it views "prudent recordkeeping practices as being essential for investor protection," the Staff suggests that "a broker-dealer that conducts a non-securities crypto asset business could make and keep the same records" for that business as it does for its securities business (emphasis added). This weak statement is surprising in light of the Staff's expansive FAQs that permit broker-dealers to conduct a business in non-securities crypto assets that could expose them to financial losses.

Transfer Agents

FAQ 10 explains that a person acting as a transfer agent for an issuer of a crypto asset that is a security must consider Exchange Act Sections 17A(c)(1) and 3(a)(25) to determine whether its activities require it to register as a transfer agent.

FAQ 11 provides the Staff's view that a registered transfer agent may utilize distributed ledger technology ("DLT") as its official Master Securityholder File as defined in Exchange Act Rule 17d-9(b) if the transfer agent complies with all other applicable requirements under the federal securities laws, including those cited in the FAQ. In that case, the transfer agent would not need to maintain a duplicate or "digital twin" of its master securityholder file exclusively off chain. A transfer agent also may keep some required information using DLT if it ensures that its records are at all times secure, accurate, up-to-date, and produceable to the Commission and its staff in an easily readable format, and maintained for the required time periods. This FAQ may contain some contradictory advice (which basically restates the requirements of the cited rules). As noted, the FAQ requires that a transfer agent using DLT as its master securityholder file must comply with the other requirements of the Exchange Act, including Rule 17Ad-7. Among other things, paragraph (f) of that rule requires a transfer agent using an "electronic storage medium" (defined as "any digital storage medium or system") for its required records to maintain separately from the originals duplicates of the records (and an index) that are stored on electronic storage media. But there is no discussion in the FAQ of why records kept using DLT do not have to comply with the requirement to keep off-chain duplicates.

Alternative Trading Systems

FAQ 12 states that a national security exchange ("NSE") or alternative trading system ("ATS") is not prohibited from offering pairs trading involving security, including a crypto asset security, and a crypto asset that is not a security. The FAQ states, however, that an NSE may need to amend its rules to permit such trading and national market system ("NMS") plan amendments may be necessary to accommodate security and non-security crypto asset pairs trading, presumably in determining how to report such quotes and trades priced in a denomination other than U.S. dollars. The FAQ also notes that various rules applicable to ATSs require the recording and reporting securities transactions in USD, and that an ATS could utilize consistent, impartial, and reasonable methods commonly applied by market participants for converting the value of an asset that is not quoted in USD. Additionally, the same conversion methodology would be necessary in determining whether an ATS meets the volume threshold requirements that require compliance with fair access and Regulation Systems Compliance and Integrity (SCI).

FAQ 13 states that Form ATS and Form ATS-N can accommodate disclosures regarding trading operations involving crypto asset securities, including pairs trading. The FAQ lists those specific sections in each Form that may be affected by operations involving crypto asset securities.

FAQ 14 makes clear that a broker-dealer operator of an ATS is not prohibited from performing broker, custodial, or clearing functions in addition to operating its ATS. This answer aligns with current understanding where an ATS is one business line among others for many broker-dealers.

FAQ 15 states that a broker-dealer operator of an ATS does not have to register as a clearing agency (under Exchange Act Sections 17A(b) and 3(a)(23)(A)) if the broker-dealer operator of the ATS is a registered broker-dealer engaging in customary brokerage or dealing activities as described in Exchange Act Section 3(a)(23)(B) in crypto asset securities.

It is worth noting that the Staff does not address the question whether state-regulated entities may perform clearing agency functions for crypto asset securities without registering with the SEC.

Exchange-Traded Products

FAQ 16 provides that the Staff "would not object" if persons transact in shares of ETPs referencing crypto assets if they operate under the circumstances described in the Staff's 2006 No-Action Letter concerning SEC Regulation M in relation to commodity-based investment vehicles ("CBIV NAL"). In effect, the FAQ extends a conditional Staff no-action position concerning market manipulation to ETPs referencing crypto assets. The Staff's position contains a few ambiguities. For example, is their conditional no-action position limited to ETPs that are continuously issued and redeemed in aggregations of at least 50,000 shares (or such other amount where the creation unit value is at least $1 million) as was the case for the CBIV products? Also, do crypto products that directly or indirectly reference instruments that are securities, futures on security indexes, or swaps on securities fall within the exclusion in footnote 5 of the CBIV NAL? The CBIV NAL also appears to be based on the Staff's understanding that the market value of the product's shares rise or fall based primarily on changes in the value of the holdings underlying the product, which generally correlate with increases and decreases in the value of a benchmark physical commodity or particular currency spot price, commodity index, or commodity futures contracts. Does that understanding also apply to the position on ETPs referencing crypto assets? A clearer articulation of the Staff's position regarding trading in ETPs referencing crypto assets would have been preferable to summarily applying a 20-year-old no-action letter.

Commentary

The FAQs contain the standard disclaimer that the Commission has neither approved nor disapproved the positions taken and that they have no legal force or effect and do not alter existing rules. As such, they are not authoritative or binding on the Commission, the courts, or investors if, for example, a broker-dealer adopts the positions espoused in the FAQs and then fails financially. However, the Staff's views inevitably will be viewed as authoritative and will be relied upon by market participants in conducting their business operations. The FAQs almost certainly reflect "no-action" positions that the Staff would adopt on the topics, i.e., the Staff would not recommend enforcement action to the Commission if market participants followed the guidance in the FAQs. Moreover, it is unlikely that the present Commission would authorize an enforcement action for conduct consistent with the FAQs.

One may ask, however, whether such groundbreaking changes to the application of core investor protection provisions should be made by way of Staff pronouncements rather than in a formal rulemaking that would have the benefit of detailed analysis and public comment.