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OCC becomes the first regulator to finalize its GENIUS Act stablecoin rule, and drops a stricter test for third-party rewards
Summary
The U.S. Office of the Comptroller of the Currency issued its final rule implementing the GENIUS Act on Wednesday, Oct. 21, setting the standards stablecoin issuers under its oversight must meet when the law takes effect on Jan. 18, 2027, according to Decrypt, The Block and Cointelegraph.
The Block and CoinDesk report the OCC is the first of the federal agencies to finish its GENIUS Act rules; the rule covers reserves, redemption, risk management, audits and reporting, custody, applications, foreign issuers and a capital backstop, Decrypt reported.
The final rule keeps the ban on issuers paying holders interest or yield just for holding stablecoins, but drops a proposed presumption that certain arrangements with affiliates or third parties break that ban, The Block and Cointelegraph reported; an OCC official told reporters such cases would be handled case by case, with the agency able to act against clear evasion.
The OCC has not said when it will start accepting issuer applications and waiver requests and will announce that separately, while anti-money laundering and sanctions rules will come in a separate rulemaking with the Treasury Department, according to Decrypt and Cointelegraph.
Updates
- Update, : Oct. 21: Bitcoin Magazine adds that the final rule scraps a proposed 20-day weighted-average maturity limit on reserve assets, lets issuers withdraw surplus reserves at any time while staying 1:1 backed, and requires issuers to notify the OCC within 24 hours if redemption requests exceed 10% of a stablecoin's outstanding value in a day, citing Crypto in America.
- Update, : Oct. 21: The Block reports the American Bankers Association accused the OCC of undermining Congress with the final rule, reigniting the fight between banks and crypto after the regulator declined to weigh in on third-party stablecoin rewards.
- Update, : Oct. 21: Cointelegraph reports the reaction is split. The American Bankers Association said the rule includes "several positive steps" but that removing the proposed safeguards on indirect arrangements lets issuers "provide economically equivalent yield while technically avoiding the statutory prohibition." The Bank Policy Institute largely sided with the ABA, while the Blockchain Association said the change brings the rule "more closely in line with the statutory text."
Key facts
- The rule and the GENIUS Act take effect on Jan. 18, 2027, the OCC said, per The Block.
- Issuers must hold reserves worth at least as much as their outstanding stablecoins and generally process redemption requests within two business days, according to Cointelegraph.
- The rule applies to national banks, federal savings associations and federal branches and their subsidiaries, nonbank firms seeking federal qualified issuer status, and state-qualified issuers where the OCC has authority, Cointelegraph reported.
- Comptroller Jonathan Gould said the rule provides "a clear, practical framework for payment stablecoin innovation, with strong standards for reserve backing, redemption, and risk management," per Decrypt.
- The OCC proposed its rules in February with a 60-day comment period and received hundreds of comments; regulators had missed the law's earlier July deadline, Decrypt reported.
- The stablecoin rewards question has been a major point of contention in the stalled Senate CLARITY Act debate, with banks arguing rewards could pull deposits away from community institutions, according to The Block.
- The final rule drops a proposed 20-day weighted-average maturity limit on reserve assets, allowing longer-dated Treasuries, and replaces a redemption-deadline extension with a 24-hour notice to the OCC when daily redemption requests exceed 10% of outstanding supply, Bitcoin Magazine reported, citing Crypto in America.
- The Blockchain Association backed the OCC's decision to drop the yield presumption, while the Bank Policy Institute said omitting it "replaces clarity with ambiguity" and risks deposit flight, Cointelegraph reported.