OCC Proposes GENIUS Act Stablecoin Rules with Mandatory Reserve Requirements

The US Office of the Comptroller of the Currency (OCC) has proposed rules to implement the GENIUS Act, the first federal stablecoin regulatory framework in the United States. The act, which passed into law last July, bars any entity that is not a 'permitted payment stablecoin issuer' from issuing a payment stablecoin in the US.

The OCC's draft defines which entities qualify as permitted issuers and what requirements apply to each category. It covers reserve asset standards, mandatory redemption at par, liquidity and risk management controls, audit and examination requirements, custody rules, and application pathways for new entrants.

The proposal also introduces a 'capital and operational backstop' and amends existing capital adequacy and enforcement rules. The OCC will hold regulatory or enforcement authority over subsidiaries of national banks, federal savings associations, federal qualified payment stablecoin issuers, certain state-qualified issuers, and foreign issuers seeking US market access.

Musheer Ahmed, founder and managing director of Finstep Asia, noted that stablecoin issuers required to hold 100% reserves are structurally more solvent than banks operating on 10-20% capital ratios. The OCC said it will hold a 60-day public comment period before finalizing the rules.