Key Highlights
- Ripple argues the SEC’s 2% stablecoin haircut is “disproportionate,” calling for 0% where broker-dealers have a direct mint-burn relationship with the issuer.
- The letter proposes a new “Qualified Payment Stablecoins” category under Rule 15c3-3 and asks the SEC to extend non-securities treatment beyond BTC and ETH.
- Ripple urges the SEC to designate on-chain registries as the sole legal register for directly issued tokenized securities, eliminating dual-registry ambiguity.
Ripple has submitted a formal written response to the SEC’s Crypto Task Force, dated May 22, 2026, following up on a March 20 meeting that included Commissioner Hester Peirce and Task Force staff. The letter, addressed to the SEC at 100 F Street NE, Washington, DC, lays out five specific regulatory proposals spanning stablecoin capital treatment, customer protection rules, digital asset non-securities classification, and the legal status of on-chain ownership registries.
The filing follows Ripple’s earlier March 20 meeting with the Task Force, which covered stablecoin treatment under broker-dealer net capital and customer protection rules. That session, which also included Ripple Prime (formerly Hidden Road) and law firm Katten Muchin Rosenman LLP, left several open questions that the May 22 letter now seeks to resolve with detailed proposals and supporting analysis.
Stablecoins as Collateral: Amending Rule 15c3-1
Ripple’s first proposal targets the treatment of stablecoins received as collateral on broker-dealer balance sheets. While the SEC’s February 2026 FAQ introduced a 2% haircut for qualifying payment stablecoins, Ripple argues that ambiguity persists around how those assets are treated in financing transactions — specifically, whether stablecoin-backed receivables would be classified as secured by an allowable asset or face full deduction in an examination.
The letter offers two paths: either recognize Qualified Payment Stablecoins as allowable assets under Rule 15c3-1 with a consistent haircut framework, or provide interpretive guidance treating such stablecoins as cash or cash equivalents under the existing rule.
New “Qualified Payment Stablecoins” Category Under Rule 15c3-3
On the customer protection side, Ripple flags a structural gap. Because payment stablecoins are non-securities — a classification the SEC’s own FAQ confirms — they fall outside the scope of SIPC protection and Rule 15c3-3 custody requirements. Ripple warns this creates reluctance among broker-dealer clients to transact in stablecoins, since those holdings lack the protections afforded to cash and securities.
Ripple proposes a narrowly defined “Qualified Payment Stablecoins” category within Rule 15c3-3, subject to conditions around reserve quality, redemption, and transparency. The company is asking the SEC to clarify four specific areas: treatment of stablecoin balances in the reserve formula, whether stablecoin-funded securities purchases generate customer debits, whether qualified stablecoins may be deposited into the Special Reserve Bank Account for the Exclusive Benefit of Customers, and whether OCC-chartered national trust banks or digital asset custodians can qualify as permissible depositories under the rule.
Expanding Non-Securities Treatment Beyond BTC and ETH
Ripple takes direct aim at Question 4 of the SEC’s FAQ on Crypto Asset Activities, which currently limits “readily marketable” treatment to bitcoin and ether in the context of spot crypto ETP in-kind creations and redemptions.
The letter notes that the Task Force acknowledged during the March meeting it did not wish to appear to be “picking winners or losers” by naming specific assets like XRP. In response, Ripple submitted a proposed redraft of A4 that would link readily marketable status to the broader digital commodities framework established in the SEC’s March 2026 crypto asset taxonomy guidance, rather than naming individual tokens. Under Ripple’s proposed language, any digital commodity with a listed ETP, interdealer quotations, or bona fide competitive bid-and-offer quotes from multiple dealers would qualify.
The Case Against the 2% Haircut
Ripple devotes a full section to arguing the current 2% haircut is “disproportionate to the risk” of stablecoins, backing the claim with a volatility analysis comparing RLUSD, USDC, and 3-month constant maturity U.S. Treasuries.
The data, sourced from CoinMarketCap and the Federal Reserve of St. Louis (FRED), shows RLUSD’s lifetime standard deviation of daily price differences at 0.0418% and USDC’s at 0.0156%, compared to the Treasury benchmark’s range of 0.00496%–0.00930%. While Ripple acknowledges stablecoins are more volatile than the Treasury composite, the company argues a 2% haircut represents a 47.85 standard deviation event for RLUSD — a confidence level so extreme as to be functionally meaningless.
Ripple’s preferred approach: a 0% haircut where the broker-dealer has a direct mint-burn relationship with the issuer, since the ability to redeem at par minus the burn fee makes secondary market pricing irrelevant. For firms without a direct redemption relationship, Ripple concedes a secondary market haircut should apply, but argues even 2% is excessive, noting that the money market fund haircut it mirrors dates to 1982 and has not been updated despite substantial post-2008 MMF reforms in 2010, 2014, and 2023.
The letter also ties its argument to the GENIUS Act, noting that redemption gates — one of the risk scenarios that could justify a higher haircut — should not be allowable once the Act is fully in effect.
On-Chain Registry as the Single Source of Legal Truth
The most structurally significant proposal addresses tokenized securities ownership. Ripple argues that directly issued on-chain tokenized securities — where a regulated digital transfer agent maintains the shareholder record exclusively on-chain — should have that on-chain record recognized as the sole legal register, not a mirror of an off-chain one.
The letter draws a sharp distinction between direct issuance models (where the token is the security, inheriting existing regulatory treatment under the Investment Company Act of 1940) and “digital twin” structures where parallel on-chain and off-chain registries create what Ripple calls “dual-registry ambiguity.”
Ripple warns that under stress conditions — particularly when securities are being rehypothecated down a collateral chain — misalignment between the two registries could create legal uncertainty over ownership “just at the time when this is most critical.” The company asks the SEC to confirm that on-chain transfers recorded by a regulated digital transfer agent constitute valid transfers of legal title, with no requirement for a parallel off-chain entry.
This proposal arrives as the SEC is actively refining its approach to tokenized securities, with Commissioner Peirce recently clarifying that upcoming tokenization rules will cover only real, asset-backed securities rather than synthetic products.
Also Read: Hester Peirce Clears Confusion Around SEC Tokenization Rule
