OCC Proposes Comprehensive Rulemaking to Implement the GENIUS Act

On February 25, 2026, the Office of the Comptroller of the Currency (“OCC”) issued a Notice of Proposed Rulemaking (the “Proposal”) to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”) for the issuance of payment stablecoins and certain related activities by entities subject to the OCC’s jurisdiction. The Proposal would establish a new 12 CFR Part 15 and amend 12 CFR Parts 3, 6, 8, and 19 to create a comprehensive framework for stablecoin issuance, including licensing, reserves, prudential standards, custody, capital, reporting, supervisory fees, and enforcement.

This Legal Update follows the structure of proposed 12 CFR Part 15 and highlights scope and preemption, core and prohibited activities, reserves and redemption, risk management and reporting, custody, applications and registrations, capital and the operational backstop, and the transition framework for large state-regulated issuers. We also highlight considerations for non-US issuers.

I. Background

The GENIUS Act, signed into law on July 18, 2025, establishes a federal regulatory framework for payment stablecoins and restricts their issuance to permitted payment stablecoin issuers (“PPSIs”). The GENIUS Act creates three pathways to become a PPSI:

• A subsidiary of an insured depository institution (“IDI”) approved by its primary federal regulator
• A “Federal qualified payment stablecoin issuer” (“FQPSI”) approved by the OCC
• A “State qualified payment stablecoin issuer” (“SQPSI”) approved by a state regulator

Additionally, it creates a path for registration payment stablecoin issuers who are not based in the United States (“FPSIs”) to continue circulating their stablecoins among US persons. Each primary federal payment stablecoin regulator must promulgate implementing regulations by July 18, 2026. The GENIUS Act takes effect on January 18, 2027, or 120 days after final implementing regulations are issued, if earlier.

In September 2025, the U.S. Department of the Treasury published an advance notice of proposed rulemaking seeking input on a variety of GENIUS Act implementation topics. In December 2025, the FDIC issued the first agency-specific implementing rulemaking, proposing an application process for subsidiaries of FDIC-supervised IDIs. Unlike the FDIC proposal, the OCC’s Proposal is comprehensive in covering licensing, prudential standards, and most ongoing obligations for OCC‑supervised PPSIs.

II. New 12 CFR Part 15

Scope, Preemption, and Definitions (Subpart A, §§ 15.1-15.2)

The proposed 12 CFR Part 15 would apply to national banks, federal savings associations, federal branches, and their subsidiaries, as well as nonbank entities seeking FQPSI status, FPSIs, and certain SQPSIs who would be subject to OCC authority, as proposed in § 15.1.

The Proposal discusses the GENIUS Act’s preemption provisions but does not propose implementing regulations, treating them as self-executing. Section 5(h) of the GENIUS Act preempts state licensing and chartering requirements for FQPSIs and IDI subsidiaries, while Section 7(f)(4) preserves state consumer protection laws. The OCC also notes that its exclusive visitorial authority under 12 U.S.C. § 484, as applicable to certain FQPSIs (i.e., those that are uninsured national banks or federal branches), continues alongside the new independent grant of exclusive OCC authority under the GENIUS Act.

The Proposal defines “outstanding issuance value” to include only payment stablecoins for which the issuer has an obligation to convert, redeem, or repurchase, excluding stablecoins minted but not yet sold (i.e., not yet subject to a redemption obligation) and stablecoins repurchased by the issuer but not yet burned, as defined in proposed § 15.2.

Permitted and Prohibited Activities (Subpart B, § 15.10)

Permitted Activities

Consistent with the GENIUS Act, under proposed § 15.10(a), PPSIs would be limited to issuing and redeeming payment stablecoins, managing reserves, providing related custodial services, and “any other activities that directly support” those core activities. The OCC acknowledges that the scope of “directly supporting” activities is ambiguous. For example, the OCC states that holding non-stablecoin crypto-assets for purposes of testing distributed ledger technology or to pay “gas fees” (network transaction fees) would be permissible as a directly supporting activity. The Proposal also clarifies that PPSIs may assess fees associated with purchasing or redeeming stablecoins. The OCC encourages PPSIs to ask the OCC directly whether a particular activity is permissible. Separately, under proposed § 15.10(b) and consistent with Section 16 of the GENIUS Act, the Proposal preserves the authority of depository institutions and trust companies to engage in other activities that are permissible under other existing laws (e.g., National Bank Act), and mentions that the OCC may authorize a PPSI to engage in additional activities.

Interest and Yield Prohibition

Under proposed § 15.10(c)(4), implementing Section 4(a)(11) of the GENIUS Act, the Proposal would implement the prohibition against PPSIs paying interest or yield to stablecoin holders and create a rebuttable presumption that certain affiliate and third‑party arrangements involving PPSIs violate the prohibition, including services that offer yield to holders and white‑label partner programs. Merchants independently offering discounts for stablecoin payments and profit-sharing in white-label arrangements would not be covered by the presumption, provided they do not involve interest or yield pass-throughs to holders. Proposed § 15.10(c)(6) would add an anti‑evasion rule that treats any arrangement designed to sidestep Section 4 of the GENIUS Act or 12 CFR Part 15 as a violation of the prohibition. The OCC is seeking comment on whether to create a de minimis exception to the interest/yield prohibition, whether the prohibition should be broadened beyond affiliates and related parties, and whether to prohibit PPSIs from issuing more than one brand of stablecoin.

Reserve Assets (Subpart B, § 15.11)

Under the GENIUS Act, PPSIs would be required to maintain identifiable, segregated reserve assets backing outstanding stablecoins on at least a 1:1 basis. The Proposal specifies that reserve assets would be measured at fair value (i.e., market value, not amortized cost), while outstanding issuance value would be measured at par value, which means that even if a stablecoin de-pegs in the secondary market, the issuer would need to maintain reserves equal to the par value of all outstanding stablecoins. The OCC generally anticipates that reserve assets would be recorded on the PPSI’s balance sheet under GAAP and included in quarterly reports and, where applicable, in Call Report Schedule RC.

Permissible reserve assets would include US currency, demand deposits at IDIs, short-term Treasury bills (93 days or less), certain reverse repurchase agreements (including intraday repos), registered government money market funds (provided they are not invested in Treasuries with remaining maturities longer than 93 days), and tokenized forms thereof, as enumerated in proposed § 15.11(b). The Proposal clarifies that neither stablecoins nor other crypto-assets qualify as permissible reserve assets. Under proposed § 15.10(c)(5), reserves would not be permitted to be pledged, rehypothecated, or reused except in limited circumstances. The Proposal would also require PPSIs to demonstrate their operational ability to monetize reserve assets, potentially through redundant monetization methods and periodic actual monetization transactions. Under proposed § 15.11(g), if reserves fall below 1-to-1 backing, the PPSI would be immediately prohibited from issuing new stablecoins; if the shortfall persisted for 15 consecutive business days, the PPSI would be required to begin liquidating reserves and redeeming all outstanding stablecoins.

The Proposal presents two alternative approaches to reserve asset diversification and concentration under proposed § 15.11(c):

• Option A would establish a principles-based general requirement coupled with an optional quantitative safe harbor. The safe harbor would require PPSIs to maintain at least 10% of their reserve assets as demand deposits or Federal Reserve balances (daily liquidity and subject to a 50% sub-concentration limit), at least 30% in assets available within five business days (weekly liquidity), no more than 40% of reserve assets at any single eligible financial institution, and a weighted average maturity of no more than 20 days. Under Option A, smaller or less complex issuers could potentially hold more concentrated positions if justified by a simpler business model.
• Option B would make the same quantitative standards mandatory for all PPSIs, without the principles-based flexibility of Option A.

Under either option, PPSIs with an outstanding issuance value of $25 billion or more would be required to maintain at least 0.5% of reserve assets as insured deposits, up to a cap of $500 million, under proposed § 15.11(d).¹ The OCC also seeks comment on whether to cap tokenized reserve assets (e.g., at 20% of total reserves).

Redemption (Subpart B, § 15.12)

The Proposal would implement several provisions addressing a PPSI’s redemption obligations. A PPSI would be required to publicly disclose a redemption policy that contains certain minimum information, including the timeframes for redemption and the maximum period following a holder’s redemption request (which generally may not exceed two business days). Other aspects of the redemption requirements include:

• Requiring the PPSI to provide a statement with clear instructions on how a payment stablecoin holder can redeem a payment stablecoin, including a link to the websites where a customer can redeem the payment stablecoin.
• Requiring the redemption policy to prominently include the PPSI’s name, a statement of its obligation to convert, redeem, or repurchase the payment stablecoin for a fixed amount of monetary value, a link to the monthly reserve composition report, and all fees associated with purchasing or redeeming payment stablecoins.
• Requiring at least seven calendar days’ notice prior to changing fees.
• Requiring a PPSI to extend the redemption period to seven calendar days if it receives redemption requests in a 24-hour period that exceed 10% of outstanding issuance.

The Proposal includes nine questions on redemption requirements, including whether the OCC should define the minimum requirements for effecting a redemption or impose limitations on redemption fees. It also asks how the OCC should address redemption requirements for PPSIs that have limited direct interaction with retail stablecoin holders (e.g., when a stablecoin holder who does not have a relationship with the PPSI seeks to initiate a redemption request).

Risk Management, Reporting, and Supervision (Subpart B, §§ 15.13–15.16)

PPSIs would be required to establish and maintain internal controls, information systems, and risk management programs addressing interest rate risk, operational risk, information technology, and cybersecurity. The Proposal would require weekly confidential reports to the OCC, monthly public reserve reports examined by a public accounting firm and certified by the CEO/CFO, quarterly financial condition reports, and annual board‑level AML/sanctions certifications.

Affiliate and Insider Transactions

The Proposal would require PPSIs to ensure that transactions with affiliates and insiders are on market terms, “not excessive and do not pose a significant risk of material financial loss,” and are “appropriately documented and reviewed by the board of directors.” The Proposal does not include specific prohibitions or quantitative limitations on transactions with affiliates or insiders that are otherwise applicable to national banks under Regulation W or Regulation O.

Change in Control

Any person seeking to acquire control of a PPSI would be required to comply with 12 CFR 5.50 as if the PPSI were a national bank, including providing 60 days’ prior written notice to the OCC under proposed § 15.14(m). These requirements would apply bank-like change‑in‑control procedures to nonbank PPSIs, even though such requirements are not contemplated in the text of the GENIUS Act.

$10 Billion State PPSI Transition

SQPSIs with more than $10 billion in outstanding issuance would be required to transition to OCC supervision within 360 days or stop net new issuance (proposed § 15.15). This section would implement Section 4(d) of the GENIUS Act. Issuers may seek a waiver; for states with certified regimes, the OCC would presumptively approve waivers if the state regulator had established the digital asset regime as of April 19, 2025 and had approved at least one issuer under it. The OCC would be able to overcome this presumption only by clear and convincing evidence.

Custody (Subpart C, §§ 15.20–15.21)

The Proposal would implement Section 10 of the GENIUS Act, establishing requirements for OCC-supervised entities that provide custodial or safekeeping services for payment stablecoins, reserve assets, stablecoins held as collateral, and private keys. For tokenized assets, the OCC proposes that a custodian demonstrates “control” if it can show that no other party can transfer the asset on a distributed ledger without the custodian’s consent.

The OCC asks a number of notable questions on custody, among them:

• Whether custodians should be permitted to commingle covered and non-covered assets in omnibus accounts.
• Whether the GENIUS Act priority regime for stablecoin holder claims (and the ability of customers to contractually waive that priority) needs further guidance.
• How Subpart C should apply to stablecoins locked in smart contracts and represented by “wrapped” tokens (i.e., substitute tokens that stand in for the locked originals) on a blockchain where the stablecoin is not natively issued, which may take the original stablecoins outside the custodian’s direct control.
• Whether the proposed framework raises fair competition concerns relative to non-OCC-supervised custodians, such as state-chartered trust companies and registered broker-dealers, that are also eligible to provide custody under Section 10(a) of the GENIUS Act.

Applications and Registrations (Subpart D, §§ 15.30–15.32)

Domestic Applications

• The OCC proposes a form-based, single-filing application process (no additional OCC filings would be required for stablecoin issuance activities).
• Each director, executive officer, and principal shareholder of a prospective PPSI would need to submit an Interagency Biographical and Financial Report.
• Applications would be evaluated on the statutory factors in Section 5(c) of the GENIUS Act, and the OCC may deny only upon a finding of “unsafe or unsound” activities.
• Issuance on a public or decentralized network is explicitly noted as not a valid basis to deny an application.
• The statutory processing timelines under Section 5(b) apply: 30 days to determine completeness, then 120 days to decide, with deemed approval if no decision is rendered, as implemented by proposed § 15.30(b)-(c).
• Under proposed § 15.30(g), the OCC may nullify an approval based on material misrepresentations, errors, or decisions contrary to law.

Foreign Issuer Registration

• FPSIs meeting the GENIUS Act’s comparability, reserve, and sanctions requirements may register with the OCC as FPSIs.
• Registration is deemed approved on the 30th day after receipt unless the OCC rejects it in writing under proposed § 15.32(d).
• FPSIs would be subject to full OCC reporting, supervision, and examination requirements.

Capital and Operational Backstop (Subpart E, §§ 15.40–15.41)

PPSI capital would consist of common equity tier 1 and additional tier 1 capital only (no tier 2, as set forth in proposed § 15.40). Unlike national bank capital rules, the Proposal as drafted would not require specific regulatory capital deductions (such as for goodwill or intangibles), but PPSIs would have no Accumulated Other Comprehensive Income (“AOCI”) opt-out—they would be required to include AOCI as a component of CET1 capital, subjecting them to potential capital volatility from changes in value of fixed-income securities. During a three-year “de novo period,” the OCC would set an individualized minimum required capital amount for a PPSI, subject to a $5 million floor under proposed § 15.41(a). After the de novo period, PPSIs would be required to self-assess capital commensurate with their risk profile. The OCC also seeks comment on:

• A possible capital add-on for FX risk
• A variable operational risk charge tied to outstanding issuance value
• Haircuts on Treasury and repo reserves for price and interest rate risk
• Credit risk charges on uninsured deposits and money market funds (e.g., a 0.4% charge for uninsured deposits)
• A custody-based charge tied to assets under custody

It also seeks comment on how an FQPSI that is a federal branch of a foreign bank could satisfy capital requirements given its lack of separate capital.

Each PPSI would also be required to maintain an operational backstop of highly liquid assets equal to 12 months of total expenses, held separately from reserves under proposed § 15.41(b). This is similar to the “runway” resource requirements imposed on clearinghouses.

Under proposed § 15.41(c), failure to meet capital or backstop requirements for one quarter would trigger a prohibition on net new issuance; failure for two consecutive quarters would trigger mandatory redemption and wind-down. For parent banks, proposed § 15.41(d) would require deconsolidation of PPSI subsidiaries for regulatory capital purposes under 12 CFR Part 3.

Other Amendments

The Proposal would add PPSIs to the OCC’s supervisory fee framework and apply a reduced fee rate to required reserve assets.

III. Considerations for Non-US Issuers

The Proposal would establish a registration pathway for FPSIs that offer US market access without becoming a US-chartered institution. A foreign issuer would be able to register with the OCC as an FPSI if it is subject to a comparable regulatory regime as determined by the Treasury Secretary under Section 18 of the GENIUS Act, and registration would be deemed approved on the 30th day after the OCC receives the filing unless the OCC rejects it in writing under proposed § 15.32(d).

FPSIs would be required to keep enough reserves at US financial institutions to meet US customer liquidity needs, unless Treasury permits otherwise under a reciprocal arrangement. The FPSI would also be required to submit monthly template reports to the OCC under proposed § 15.32(d)(3), describing the total number of outstanding stablecoins held by US customers and the amount and composition of the issuer’s reserves, including their geographic location and average tenor. Under proposed § 15.32(c)(5), registration would also require the FPSI to consent to the jurisdiction of federal courts and all US government agencies for purposes of any claims or proceedings arising under the GENIUS Act and other applicable federal laws. Under proposed § 15.33(b), the OCC would retain authority to rescind registrations for noncompliance, including for maintaining insufficient reserves or posing illicit finance or financial stability risks. BSA/AML and OFAC sanctions compliance requirements applicable to FPSIs would be addressed in a separate rulemaking and are not yet final.

For non-US financial institutions considering this pathway, the registration mechanism would provide a streamlined route to offering stablecoins to US customers through digital asset service providers. However, the reserve localization requirement, which would mandate that reserves sufficient to meet US customer demands be held at US financial institutions, the monthly reporting obligations covering reserve composition and geographic detail, and the broad consent to US enforcement jurisdiction would each require early planning in balance sheet positioning, development of US operational infrastructure, and careful legal risk assessments.

IV. Observations

While the Proposal would cover most core GENIUS Act topics for OCC-supervised PPSIs, the OCC notes it is only ‘one piece’ of its implementing rules. BSA/AML and sanctions standards would follow in a separate proposal.

Notably, the Proposal does not address Section 4(a)(12) of the GENIUS Act’s restrictions on ownership of PPSIs by non-financial entities, despite the Treasury’s September 2025 ANPRM having solicited comment on this topic. Whether the OCC intends to address this in a subsequent rulemaking or considers the statutory provision self-executing is unclear.

The Proposal contains over 200 numbered questions on which the OCC solicits comment. Comments to the Proposal are due by May 1, 2026.

 

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¹ The Proposal does not address whether a PPSI’s deposits with an IDI would be eligible for pass-through deposit insurance from the FDIC, although the agency recently messaged that they are unlikely to be eligible. See https://www.fdic.gov/news/speeches/2026/remarks-fdic-chairman-travis-hill-update-reforms-regulatory-toolkit.