SEC Rewrites Crypto Rulebook as Compliance Era Begins

The U.S. Securities and Exchange Commission (SEC) has released a sweeping set of updates designed to integrate digital assets more directly into the regulated financial system.

Largely shaped by the GENIUS Act passed in 2025, the February 2026 guidance signals a structural shift toward what SEC Chair Paul Atkins has described as a compliance-first framework.

Rather than regulating primarily through enforcement actions, the SEC is now defining operational standards for exchanges, broker-dealers, and digital asset issuers.

Key Regulatory Changes (February 2026)

Direct Security-to-Crypto Trading Pairs

New guidance confirms that National Securities Exchanges (NSEs) and Alternative Trading Systems (ATSs) can facilitate direct trading between security tokens and non-security crypto assets like Bitcoin.

Previously, trades typically required fiat as an intermediary step. The updated framework removes that requirement, allowing security-to-Bitcoin pairs to trade directly under regulated venues.

Stablecoin Capital “Haircut” Reduced to 2%

One of the most significant changes involves broker-dealer capital treatment.

Previously, qualified payment stablecoins were assigned a 100% capital haircut, effectively making them unusable for regulatory capital calculations.

Under the new SEC staff FAQ:

• The haircut has been reduced to 2%
• Broker-dealers can now count 98% of qualified stablecoin holdings (such as USDC and USD1) toward net capital requirements

This aligns stablecoins more closely with high-quality money market instruments.

Unified ATS Operational Structure

ATS broker-dealers are now permitted to combine:

• Brokerage
• Custody
• Clearing

within a single legal entity, provided they meet defined legal and technological safeguards. Previously, these functions were often structurally segregated.

The change simplifies operational models while maintaining regulatory oversight standards.

Regulation M Relief for Crypto ETPs

The SEC clarified that certain crypto Exchange-Traded Products (ETPs) can operate under the Regulation M framework, provided they are listed on a national exchange and follow established market integrity rules.

This clarification reduces uncertainty around secondary market trading conditions for crypto-linked ETPs.

Market Impact Summary

Broader Regulatory Context

These updates fall under “Project Crypto,” a coordinated SEC–CFTC initiative aimed at harmonizing federal digital asset oversight.

In parallel, the SEC introduced an Innovation Exemption in early 2026. Qualified projects can now operate for up to three years under enhanced disclosure requirements without facing immediate enforcement, provided compliance standards are met.

What This Signals

After analyzing the scope of these changes, it becomes clear that the SEC is no longer focused solely on enforcement boundaries. Instead, the regulator is building structured pathways for integration between traditional finance and blockchain infrastructure.

The reduced stablecoin haircut, direct security-to-crypto trading pairs, and unified ATS functions collectively lower friction for institutional participation.

While enforcement authority remains intact, the February 2026 updates suggest a deliberate pivot: from reactive oversight toward systemic integration of digital assets within U.S. capital markets.

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