The SEC Division of Trading and Markets Crypto FAQs: Operational and Structural Implications
The SEC Division of Trading and Markets updated its crypto FAQs on February 19, 2026 to add new net capital guidance for “payment stablecoins.” Specifically, the staff states it will not object if a broker-dealer treats a proprietary position in a qualifying payment stablecoin as having a “ready market” under Rule 15c3-1 and applies a 2% haircut to the market value of the greater of the long or short position.
In general, FAQs reflect staff views and does not amend existing law. It provides interpretive clarity on the application of broker-dealer financial responsibility rules, net capital treatment, SIPA, transfer agent obligations, Regulation ATS, and related market structure requirements in the context of crypto asset activity.
Some of what we will highlight here is new, and other aspects are not. The FAQs apply existing statutory and regulatory frameworks to crypto-related activity. They do not create a parallel regime.
Rule 15c3-3: Possession and Control
The headline is that we are finally inching closer to clarity for broker-dealers and crypto.
The staff confirms that paragraph (b) of Rule 15c3-3 applies only to securities carried for customers or proprietary accounts of other broker-dealers. Crypto assets that are not securities are not subject to the possession or control requirements of Rule 15c3-3(b).
With respect to crypto asset securities, the staff states that a broker-dealer may establish “control” under paragraph (c) of Rule 15c3-3. Although certain control locations reference certificated securities, the staff will not object if crypto asset securities are not in certificated form when held at an otherwise qualifying control location.
Can regular broker-dealers custody crypto? It never made sense to me that you had to jump through extra hoops. The staff has confirmed that compliance with the Commission’s 2020 statement on Custody of Digital Asset Securities by Special Purpose Broker-Dealers is not mandatory. That statement did not amend Rule 15c3-3. A broker-dealer carrying crypto asset securities may establish control under the traditional framework of paragraph (c).
The analysis remains functional: the broker-dealer must demonstrate that it has obtained and maintained possession or control consistent with the rule’s requirements.
Net Capital Treatment
Bitcoin and Ether
The staff will not object if a broker-dealer treats proprietary positions in bitcoin or ether as readily marketable for purposes of applying the 20 percent commodity haircut under Appendix B to Rule 15c3-1. This provides clarity for capital computations involving proprietary digital asset exposure.
Payment Stablecoins
The February 19, 2026 update adds guidance regarding proprietary positions in “payment stablecoins.” The staff will not object if a broker-dealer:
Treats a proprietary position in a qualifying payment stablecoin as having a “ready market” under Rule 15c3-1; and
Applies a 2 percent haircut to the market value of the greater of the long or short proprietary position.
The definition of “payment stablecoin” references the GENIUS Act framework and, prior to full effectiveness, specified reserve, disclosure, and attestation conditions. The 2 percent haircut materially differs from the 20 percent commodity haircut and reflects the staff’s view that qualifying payment stablecoins may be treated as low-volatility instruments for net capital purposes, provided structural requirements are satisfied.
SIPA and SIPC Protection
The staff clarifies the scope of protection under the Securities Investor Protection Act (SIPA):
Crypto assets that are investment contracts are not treated as “securities” under SIPA unless they are the subject of a Securities Act registration statement.
Non-security crypto assets are not protected by SIPC.
Accordingly, most crypto assets held at a SIPC-member broker-dealer will not receive SIPC protection. SIPC coverage remains limited to “securities” as defined in SIPA.
The staff notes that a broker-dealer may agree with customers to treat non-security crypto assets as “financial assets” under Article 8 of the Uniform Commercial Code and hold them in a “securities account.” Such structuring could reduce the likelihood that those assets become property of the broker-dealer’s estate in a SIPA or Bankruptcy Code liquidation. This approach does not create SIPC protection but may affect insolvency treatment under state commercial law.
Recordkeeping Expectations
The staff emphasizes that prudent recordkeeping is essential when a broker-dealer conducts non-security crypto asset activity. It states that a broker-dealer could make and keep the same records for non-security crypto activities as it does for securities activities.
This reflects an expectation that distributed ledger records alone are insufficient. Broker-dealers must maintain accurate, up-to-date, and Commission-produceable records consistent with Exchange Act recordkeeping requirements.
Transfer Agents and Distributed Ledger Technology
Registration Analysis
A person acting as a transfer agent for an issuer of a crypto asset security may be required to register if:
The security is registered under Section 12 of the Exchange Act (or would be but for specified exemptions); and
The person performs one or more of the activities enumerated in Exchange Act Section 3(a)(25), including registering transfers, countersigning securities, monitoring for unauthorized issuances, exchanging or converting securities, or transferring record ownership by book-entry.
The analysis mirrors traditional transfer agent registration determinations and applies equally to tokenized securities.
Master Securityholder File on Blockchain
The staff states that a registered transfer agent may use distributed ledger technology as its official Master Securityholder File, or a component thereof, provided it complies with all applicable recordkeeping, reporting, safeguarding, and examination requirements under the federal securities laws.
The staff does not require an exclusively off-chain duplicate record. The determinative considerations are that records are secure, accurate, current, maintained for required retention periods, and producible to the Commission in an easily readable format.
Pairs Trading on Exchanges and ATSs
The FAQs address whether a national securities exchange or alternative trading system may offer trading pairs involving a security, including a crypto asset security, and a non-security crypto asset.
The staff states that such activity is not prohibited, provided the platform complies with applicable federal securities laws.
For exchanges, rule amendments and potentially national market system plan amendments may be required.
For ATSs, Regulation ATS obligations apply, including:
Proper notice and disclosure on Form ATS or Form ATS-N;
Compliance with recordkeeping and reporting requirements, including Rules 301(b)(8) and (b)(9);
Adherence to fair access, display, and related obligations where applicable.
Where transaction value is based on a non-USD asset, such as a non-security crypto asset, an ATS may convert the value to USD using consistent, impartial, and reasonable methods commonly applied by market participants for reporting and threshold purposes.
Clearing Agency Registration
The staff confirms that a broker-dealer operator of an ATS is not required to register as a clearing agency when clearing and settling transactions in crypto asset securities for its own customers, provided it is engaging in customary brokerage or dealing activities.
The analysis relies on the statutory exclusion in Exchange Act Section 3(a)(23)(B)(iii). Internal book-entry debits and credits associated with customary brokerage functions remain within that exclusion.
Regulation M and Crypto ETPs
With respect to Regulation M, the staff states that it would not object to persons transacting in shares of crypto asset exchange-traded products operating under circumstances similar to those described in the staff’s 2006 no-action letter concerning commodity-based investment vehicles, provided the ETP shares are listed and traded on a national securities exchange pursuant to Commission-approved rules.
The anti-fraud and anti-manipulation provisions of the federal securities laws continue to apply.
The Division of Trading and Markets FAQs articulate how established broker-dealer, capital, custody, transfer agent, and market structure frameworks apply to crypto-related activity. They confirm that crypto asset activity can be conducted within existing securities law structures, provided firms satisfy the applicable possession or control, net capital, recordkeeping, disclosure, and market structure requirements.
That’s all for now,
Braeden
- - - - - - - - - - - - -
About the author
K. Braeden Anderson is a Partner at Gesmer Updegrove LLP, where he leads the firm’s Securities Enforcement & Investigations practice, and chairs Mackrell International’s Blockchain & Digital Assets Group and Securities Enforcement & Investigations Group. He is a nationally recognized securities regulatory and enforcement attorney whose practice sits at the intersection of traditional financial regulation and emerging technology. He has been recognized in Best Lawyers: Ones to Watch® in America (2025) for Financial Services Regulation Law and Securities Regulation, and was named the #1 most-read fintech thought leader in the United States in Mondaq’s Spring 2025 Thought Leadership Awards.
Before joining Gesmer Updegrove, Braeden founded a Washington, D.C.–based law firm. He previously served as Assistant General Counsel at Robinhood Markets, Inc. (NASDAQ: HOOD), advising on high-stakes regulatory and enforcement matters, and earlier practiced at Kirkland & Ellis LLP and Sidley Austin LLP in New York and Washington, D.C.
Braeden is a prominent voice in securities and crypto regulation and a leading example of how lawyers can build brand through education and content. He publishes a weekly newsletter reaching more than 20,000 legal and financial professionals, runs a YouTube channel with over 160,000 subscribers, and regularly produces written and multimedia thought leadership through his blog, Anderson Insights. His work focuses on enforcement trends, fintech regulation, and the evolving role of digital assets in capital markets.
