OCC Proposes Stablecoin Redemption Rules with Seven-Day Delay

The Office of the Comptroller of the Currency (OCC) has proposed new rules for stablecoin redemption, which could affect how quickly users can access their funds. The proposal suggests that stablecoin issuers may need to wait seven calendar days before redeeming tokens, but this does not necessarily mean that customers will have to wait just as long.

According to the OCC's framework, if a customer wants to exit a stablecoin early, they will need to find a conversion provider who is willing to fund their exit. This provider can then sell the redeemed token and hold onto the cash until the issuer redeems it. The OCC proposes that issuers would have an ordinary redemption deadline of two business days, but this could be extended to seven calendar days if there are high demand for redemptions.

Circle's terms for USDC holders outside the European Economic Area (EEA) also highlight the importance of access routes. Holders receive a conditional redemption right, but direct redemption access is only available through an eligible Circle Mint account in good standing. This means that even if a customer wants to redeem their tokens immediately, they may still have to wait for the issuer to process their request.

The OCC's proposal suggests that reserve backing and market liquidity do different jobs. Qualifying Treasury-bill repo borrowing could provide a potential source of issuer liquidity alongside liquid reserves, but this does not necessarily mean that customers will be able to access their funds quickly.