The OCC Puts Stablecoins Inside the Bank Regulatory Perimeter
A proposed rule implementing the GENIUS Act would require fully backed, bankruptcy-remote reserves, enforceable redemption standards and a presumption against arrangements that pay holders yield.
WASHINGTON — The Office of the Comptroller of the Currency proposed a comprehensive rule this week to implement the GENIUS Act, setting out what a company must do to be a permitted payment stablecoin issuer under federal supervision.
The proposal is the most detailed statement yet of how American regulators intend to treat dollar-denominated tokens that promise redemption at par — instruments that now move enormous volumes daily and that, until this legislation, occupied an uncertain place in financial regulation.
What the rule requires
Four elements define the framework.
Full backing. Reserves must fully cover outstanding tokens and be held in high-quality liquid assets, structured to be bankruptcy remote from the issuer's other obligations.
Redemption. Issuers face enforceable expectations about honoring redemptions, with liquidity standards designed around the possibility that a large share of holders ask for dollars at once.
No yield, presumptively. The proposal establishes a rebuttable presumption against indirect arrangements that pay holders a return. The concern is that a token paying interest is functionally a deposit or a money market fund, and should be regulated as one.
Foreign issuers. A supervisory framework addresses tokens issued outside the United States that circulate within it.
The deposit question underneath
The OCC's stated concern extends beyond issuer solvency to what large stablecoin reserve balances do to the rest of the system. Reserves parked in Treasury bills affect that market. Reserves held as bank deposits concentrate funding in a small number of institutions and can leave abruptly.
And every dollar a household or business holds in tokens is a dollar not held as a bank deposit — which is a funding question for community banks whose lending capacity depends on local deposits.
What comes next
The proposal follows conditional national trust charters granted at the end of last year to several digital-asset firms, and it arrives amid a surge of applications from companies seeking federal recognition.
The practical effect, if adopted, is to convert a lightly supervised industry into a chartered one, with the compliance costs and the credibility that come with it. For the largest issuers, that trade has always looked worthwhile. For smaller ones, the capital minimums alone will determine who continues.
