OCC Proposes Stablecoin Regulations

The Office of the Comptroller of the Currency (OCC) issued proposed rules to implement its responsibilities under the GENIUS Act, the 2025 law that establishes a statutory framework for regulating stablecoins. The proposal provides insights into how regulators will approach core policy questions for stablecoin issuers, including reserve management and capital requirements.

• The proposal signals that some common stablecoin industry business models, including arrangements involving yield or yield-like payments to stablecoin holders, revenue sharing between affiliates, and issuing stablecoins on behalf of third parties, may need to adjust under the new regulatory regime.
• It also indicates that the OCC is seeking to avoid materially different prudential treatment for functionally similar activities to avoid regulatory arbitrage across charter types.
• Because the Act provides clarity for potential stablecoin issuers and a pathway for nonbank issuers to receive a federal charter that allows operations in all 50 states, more issuers may enter the stablecoin industry. It may also encourage more firms to use stablecoins for both domestic and cross-border payments.
• Firms should assess whether using stablecoins could improve payment speed, cost, or settlement certainty compared to traditional payment rails, such as cross-border transactions, after-hours settlement, or high-friction vendor payments while also monitoring potential tradeoffs such as greater compliance or accounting burdens.
  

Overview of the GENIUS Act

With the signing of the GENIUS Act (“the Act”) into law on July 18, 2025, the US established a new regulatory regime for stablecoins, a kind of crypto asset designed to maintain a peg to a fiat currency, typically the US dollar. The Act addresses key questions about stablecoin oversight and assigns regulatory authority for non-bank federally chartered stablecoin issuers and state-chartered issuers with more than $10 billion in issuance to the OCC.

Permitted Issuers

According to the Act, only “permitted payment stablecoin issuers” may issue stablecoins in the US, which includes subsidiaries of insured depository institutions (i.e., banks or credit unions), nonbank entities approved by the OCC or a state stablecoin regulator, and uninsured national banks chartered and approved by the OCC. The OCC will also regulate foreign firms that have been approved to issue stablecoins in the US by the Treasury Department.

Notably, the Act also limits the ability of public non-financial companies – including wholly or majority owned subsidiaries – from issuing stablecoins without an exemption granted by a new Stablecoin Certification Review Committee. This measure is intended to respond to concerns that the entry of large technology and social media firms, e.g., Meta, into the stablecoin market could raise market concentration and consumer privacy concerns.

Capital & Liquidity of Reserves

Issuers are required to maintain one-to-one reserves backing their outstanding stablecoins. The Act specifies which assets are eligible reserves, which are limited to cash and other highly liquid assets based on US Treasury debt, including Treasury debt with maturities of 93 days or less, reverse repurchase agreements collateralized by Treasury debt, and tokenized forms of such reserves. The Act also requires regulators to issue rules on reserve asset diversification, including limits on deposit concentrations at banks, and standards for managing interest rate risk.

Interest

The Act prohibits issuers from paying interest – including yield paid in cash or tokens – to stablecoin holders.

Additional information about the Act’s provisions is available here. 

Key Features of the Proposed Regulation

The proposed rule¹ presents two options for regulating the diversification and concentration of assets held in reserve for stablecoins. Option A takes a more principles-based approach, stating that issuers must maintain reserves sufficient to manage potential credit and liquidity risks with a quantitative “safe harbor” for issuers to be considered to have met the requirement. Option B would establish the safe harbor benchmarks as requirements rather than guidelines.

Consistent with the Act, the proposed rule prohibits issuers from paying interest or yield to stablecoin holders (including through related third parties). The issue of stablecoin interest payments has generated significant debate, with some stakeholders (particularly banks) accusing issuers of skirting the Act. Congress is currently considering strengthening the Act’s prohibition. The OCC is also considering whether issuers should continue to be allowed to offer more than one “brand” of stablecoin or issue stablecoins on behalf of multiple third parties. This is a core business for some firms, such as Paxos, the issuer for PayPal’s stablecoin (PYUSD).

The OCC would also require new issuers to maintain capital of at least $5 million. After the de novo period, issuers would determine capital levels based on their business models and risk profiles with oversight from the OCC. The OCC is also considering an alternative approach by which required capital would be based on the issuer’s outstanding stablecoin. Issuers must also maintain assets sufficient to cover 12 months of expenses. Notably, the proposed rule would allow uninsured national trust banks to opt into this capital regime whether or not they are stablecoin issuers, a step intended to create consistency across trust banks.

Under the proposed rule, foreign stablecoin firms that have been approved by the Treasury Secretary for US issuance would be subject to the same reporting and examination requirements as domestic issuers.

Outlook & Implications for Business

Comments are due by May 1. While it’s uncertain when the OCC will finalize its regulations, the GENIUS Act’s provisions become effective 18 months after its enactment (January 18, 2027) or 120 days after regulators issue final rules, whichever is earlier. Other prudential regulators (National Credit Union Administration, the Federal Deposit Insurance Corporation, and the Federal Reserve) have yet to issue their proposed regulations for public comment.

Firms should assess where stablecoins could improve payment speed, cost, or settlement certainty in their operations. In particular, firms should focus on use cases where stablecoins may outperform traditional payment rails, such as cross-border transactions, after-hours settlement, or high-friction vendor payments.

Businesses should also monitor competitor adoption as a signal of demand for stablecoin payments in both B2B and retail contexts. Even if stablecoin usage remains limited in the near term, competitors that adopt it may gain a first-mover advantage, especially in cross-border commerce or digital-native markets, which could pressure firms with inferior settlement speed, pricing, or payment options on legacy rails.

However, firms should carefully evaluate tradeoffs and be aware of cases where stablecoins may introduce more compliance, accounting, and operational burden than operational benefit.