Stablecoin Holders May Face Up to Week-Long Wait for Redemption

The Office of the Comptroller of the Currency (OCC) has proposed a framework for stablecoin redemption, which could affect how quickly holders can access their funds. According to the proposal, if a stablecoin holder wants to spend their dollars before the issuer redeems the token, they may have to wait up to seven calendar days.

The OCC's proposed section 15.12 would set an ordinary redemption deadline of two business days following the request date. However, demands exceeding 10% of outstanding issuance value in one 24-hour period would automatically extend the period to seven calendar days for outstanding and subsequent requests.

Circle's $USDC terms for holders outside the European Economic Area distinguish token ownership from direct redemption access. Holders must have an eligible Circle Mint account in good standing to redeem their tokens, and even then, they may not be able to do so immediately.

The proposal contemplates qualifying Treasury-bill repo borrowing to support redemptions, which could provide a potential source of issuer liquidity alongside liquid reserves. However, this does not establish an actual counterparty commitment, nor does it remove the proposed conditions for redeeming early during the seven-day extension.