SEC's Old Money Haircut Overhaul: Stablecoin Capital Requirements Drop to 2% in Major 2026 Policy Shift

The SEC has fundamentally reshaped how regulated firms can utilize stablecoins for critical financial functions. Under the new framework, the capital haircut—previously set at a stringent 100%—has been dramatically reduced to just 2%. This represents a watershed moment for the digital asset industry, where the old money haircut standard finally aligns with the treatment applied to traditional money market funds. Industry observers have hailed this as one of 2026’s most consequential regulatory developments, signaling a genuine shift toward institutional adoption of blockchain-based settlement infrastructure.

From 100% to 2%: How the Old Money Haircut Realignment Mirrors Money Market Fund Standards

The mechanics of this change are significant. Previously, financial regulators required firms to maintain capital reserves equal to 100% of their stablecoin holdings—effectively penalizing any use of digital currencies for business operations. The new old money haircut model applies a 2% standard, bringing stablecoins into parity with how money market funds are treated on traditional balance sheets. This parity is not merely symbolic; it fundamentally changes the economics of stablecoin integration. Firms can now deploy capital more efficiently, treating digital assets with the same regulatory flexibility afforded to conventional money market instruments.

Unlocking New Settlement and Collateral Possibilities for Regulated Stablecoin Platforms

The practical implications extend across multiple use cases. Regulated firms can now confidently deploy stablecoins for settlement operations—reducing transaction friction and clearing times in financial workflows. Collateral arrangements become more attractive when capital haircuts plummet from 100% to 2%, as firms can pledge stablecoins with minimal regulatory drag. Additionally, tokenized assets—securities and other instruments issued on blockchain networks—gain legitimacy when they can be settled using stablecoins with capital-efficient treatment. What previously required expensive workarounds or manual processes can now flow through digital settlement channels, driving capital efficiency across market participants.

The Path Forward: Custody, Compliance, and Operational Readiness as Adoption Enablers

However, regulatory permission alone does not guarantee immediate adoption. Three critical pillars must be addressed before the old money haircut realignment translates into widespread market activity. First, custody standards for stablecoins held by regulated entities must achieve institutional-grade robustness, with clear protocols for safeguarding digital assets. Second, compliance infrastructure—anti-money laundering procedures, know-your-customer verification, and regulatory reporting—must mature to handle tokenized settlement flows at scale. Third, operational readiness across exchanges, custodians, and market participants requires investment in systems, personnel training, and cross-platform integration. Until these foundational elements solidify, the capital efficiency gains enabled by the new policy may remain largely theoretical. The 2% haircut creates the regulatory opening; execution excellence will determine whether the industry actually steps through it.