Circle has asked the U.S. Securities and Exchange Commission (SEC) to safeguard permissionless institutional networks as the regulator finalizes its proposed Regulation Crypto Assets. The company wants technology-neutral rules that cover networks allowing open participation while relying on known, permissioned validators — structures it says can support the issuance, transfer, and settlement of covered crypto assets. Because the proposal is intended to set the framework for investment contracts involving crypto assets, how it treats network infrastructure could shape the systems used to issue, transfer, and settle those assets.

Circle submitted its recommendations on Oct. 20 and disclosed them in a blog post on Wednesday (Oct. 28). Its comments address how the SEC should treat network structures and payment stablecoins as the agency develops the proposal.

Circle Asks SEC to Recognize Network Structures

Circle said it supports a technology-neutral approach and asked the SEC to make clear that a permissionless institutional network with permissioned validators can fit within the framework. The company cited its own Arc Network, a Layer-1 blockchain built for stablecoin finance, as an example.

In its comments, Circle described such networks as infrastructure for issuing, transferring, and settling covered crypto assets — meaning assets within the scope of the proposed rules. It argued that an auditable set of known validators can provide added security and functionality while the blockchain remains permissionless. The recommendation centers on how the rule treats network design rather than asking the SEC to exclude open networks.

Stablecoin Treatment Is Another Key Request

Circle also urged the SEC to coordinate the proposal with the GENIUS Act, the federal statute governing payment stablecoins. It asked the agency to clarify how GENIUS-compliant payment stablecoins may be used as consideration and settlement assets in capital formation, linking stablecoin treatment to transactions covered by the proposed rules.

The company further requested clarity on whether qualifying payment stablecoins receive appropriate accounting and customer-reserve treatment. It recommended reducing the current 2% broker-dealer haircut to zero for GENIUS-compliant payment stablecoins — a haircut being the percentage by which an asset's value is discounted in regulatory reserve calculations.

These positions are recommendations contained in Circle's comments — not changes the SEC has announced. They arrive as regulators weigh treatment for digital assets, including new crypto rules for banks.

Another requested clarification concerns technical services performed after a network becomes functional. Circle asked the SEC to confirm that such services do not constitute essential managerial efforts — a concept in securities-law analysis that examines whether an asset's value depends on the ongoing efforts of others, a factor relevant to determining whether something is offered as an investment contract.

Circle said its broader aim is clear, technology-neutral rules for onchain capital formation. In its letter, it argued the proposal could combine traditional and onchain finance if payment stablecoin treatment is coordinated with the GENIUS Act and reflects the assets' legal and economic characteristics.

SEC Proposal Opened a Comment Period

The SEC proposed Regulation Crypto Assets on Aug. 18. According to its press release, the new rules would provide a clear framework for certain investment contracts involving crypto assets. The agency said a 60-day comment period would follow publication in the Federal Register.

The proposal appeared in the Federal Register on Aug. 21, and the SEC page listed Oct. 20 as the public comment due date. Circle filed its comments on that date.

SEC Chairman Paul S. Atkins said the proposal seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under federal securities laws. How the SEC responds to comments such as Circle's will indicate whether the final rule accommodates permissioned-validator network designs and GENIUS-aligned stablecoin treatment.