backOn February 25, 2026, the Office of the Comptroller of the Currency (“OCC”) issued a comprehensive notice of proposed rulemaking (“NPRM”) to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act” or the “Act”), which was enacted on July 18, 2025. The proposed rule establishes a detailed regulatory framework for the issuance and supervision of payment stablecoins by entities under the OCC’s jurisdiction, including among others, national banks and federal savings associations and their respective subsidiaries, federal branches of foreign banks, and nonbanking entities seeking to become federally qualified payment stablecoin issuers. This alert summarizes the key provisions of the proposed regulations and identifies novel elements that go beyond the statutory framework, areas requiring further regulatory development, and the upcoming opportunity to comment.
The OCC’s Role Under the GENIUS Act
The GENIUS Act establishes a framework for regulating “payment stablecoins,” which the statute defines as digital assets that are designed to be used as a means of payment or settlement and that the issuer is obligated to convert, redeem, or repurchase for a fixed amount of monetary value.1GENIUS Act § 2(22), Pub. L. No. 119-27, 139 Stat. 419, 421-22 (2025) (codified at 12 U.S.C. § 5901(22)). The Act designates the OCC as the primary federal regulator for several categories of permitted payment stablecoin issuers (“PPSIs”). Under the GENIUS Act, the OCC is responsible for licensing, supervising, and examining: (1) subsidiaries of national banks and Federal savings associations that issue payment stablecoins; (2) Federal qualified payment stablecoin issuers, including uninsured national banks and nonbank entities chartered by the OCC; and (3) certain State qualified payment stablecoin issuers that cross specified thresholds or during unusual and exigent circumstances. The OCC also has regulatory authority over foreign payment stablecoin issuers seeking to operate in the United States under the Act.2 12 U.S.C. §§ 5901(23), 5903, 5916; Office of the Comptroller of the Currency, Implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the Office of the Comptroller of the Currency, Notice of Proposed Rulemaking, 91 Fed. Reg. 10202 (published Mar. 2, 2026) (to be codified at 12 C.F.R. pts. 3, 6, 8, 15, & 19). The GENIUS Act mandates that federal agencies including the OCC promulgate comprehensive regulations for PPSIs under its jurisdiction.
Summary of Proposed Requirements
A. Permitted Activities and Prohibitions
The proposed rule codifies the statutory framework governing the permissible activities for PPSIs and implements key statutory prohibitions of the GENIUS Act. A PPSI may only engage in the following activities: (1) issuing payment stablecoins; (2) redeeming payment stablecoins; (3) managing reserves, including purchasing, selling, holding, and providing custodial services for reserve assets; (4) providing custodial or safekeeping services for payment stablecoins, reserves, or private keys; (5) assessing fees for purchases and redemptions; (6) acting as principal or agent with respect to payment stablecoins; and (7) paying fees to facilitate customer transactions (such as network “gas” fees). Permitted payment stablecoin issuers may not use deceptive names incorporating references to the U.S. Government (though “USD” to indicate dollar peg is permitted). Issuers also may not market stablecoins in a way that would cause a reasonable person to perceive them as legal tender, issued by the United States, or guaranteed by the U.S. Government.3Proposed Stablecoin Reg. at 32-37.
Perhaps most significantly, the GENIUS Act prohibits issuers from paying holders any form of interest or yield solely in connection with the holding, use, or retention of a payment stablecoin. The OCC’s proposed rule goes a step further and creates a rebuttable presumption that arrangements with affiliates or “related third parties” (including white-label partners) to pay interest or yield to stablecoin holders violate this prohibition. Issuers may seek to rebut this presumption by submitting written materials to the OCC, demonstrating that the arrangement does not violate or evade the statutory prohibition.4Id. at 38-40.
B. Reserve Asset Requirements
The proposed rule implements the Act’s requirements that PPSIs maintain identifiable reserves backing outstanding stablecoins on at least a one-to-one basis. Reserve assets must be segregated, identifiable, and either held directly by the issuer or custodied at an eligible financial institution. The rule specifies that permissible reserve assets include U.S. currency and Federal Reserve Bank account balances, demand deposits at insured depository institutions (subject to FDIC limitations), Treasury bills, notes, or bonds with a remaining maturity of 93 days or less, repurchase and reverse repurchase agreements with overnight or intraday maturity, money market funds invested exclusively in qualifying assets, and tokenized versions of the foregoing.5Id. at 44-51.
The OCC has proposed two alternative approaches for liquidity and diversification requirements (designated as Option A and Option B in the NPRM). Under either approach, issuers would generally be required to maintain at least 10% of reserve assets in immediately available funds (demand deposits or Federal Reserve Bank balances), at least 30% in funds available within five business days, and no more than 40% of reserve assets at any single eligible financial institution. Reserves must also maintain a weighted average maturity of no more than 20 days. Issuers with $25 billion or more in outstanding issuance must maintain at least 0.5% of reserves (up to $500 million) as FDIC-insured deposits.6Id. at 52-62.
The proposed rule also requires monthly public reporting on reserve composition and monthly examinations of that report by a registered public accounting firm. The CEO and CFO must certify the accuracy of each monthly reserve report to the OCC. These transparency requirements are designed to provide regulators, market participants, and the public with timely information about the quality and composition of assets backing outstanding stablecoins.7Id. at 64-66.
C. Capital and Operational Backstop Requirements
The proposed rule takes a tailored approach to capital requirements, recognizing that stablecoin issuers present a different risk profile than traditional banks. Capital requirements will initially be established on an individualized basis during the chartering or licensing process, with a floor of $5 million for de novo issuers. The OCC will consider factors including projected revenues, expenses, cash burn rates, and operational complexity. After the initial three-year “de novo period,” issuers must maintain capital commensurate with their business model and risk profile, as assessed by the issuer and reviewed by the OCC during examinations.8Id. at 131-40.
In addition to minimum capital, issuers must maintain an “operational backstop” consisting of highly liquid assets equal to 12 months of total operating expenses. These assets must be held in currency, Federal Reserve Bank balances, fully insured deposits, or short-term Treasury securities, and must be separately identified from reserve assets. If an issuer fails to meet capital or backstop requirements at quarter-end, it is prohibited from issuing new stablecoins. If it fails to meet these requirements for two consecutive quarters, it must begin liquidating reserves and redeeming outstanding stablecoins.9Id. at 147-49.
The OCC has solicited comment on alternative approaches, including variable capital components based on outstanding issuance value, price or interest rate risk associated with reserve assets, and credit risk. The OCC has also proposed that insured national banks and Federal savings associations that own a permitted payment stablecoin issuer subsidiary deconsolidate that subsidiary for regulatory capital purposes. This ensures that capital held at the stablecoin issuer is not double-counted at the parent bank level.10Id. at 140-46, 151-53.
D. Licensing, Registration, and Transition Provisions
The proposed rule establishes a comprehensive application process for entities seeking to become PPSIs. Insured national banks and Federal savings associations seeking to issue stablecoins through a subsidiary, as well as nonbank entities seeking to become federally qualified PPSIs, must submit an application to the OCC and receive OCC approval prior to issuing stablecoins. Applications must include detailed information regarding: the proposed payment stablecoin and proposed activities of the prospective issuer; the financial condition of the prospective issuer, including capital, liquidity, reserve assets, and pro forma financial projections for the first three years of operations; the prospective issuer’s ownership, control, and management structure; relevant policies, procedures, and customer agreements; and an engagement letter with a registered public accounting firm to perform monthly reserve examinations. The OCC has committed to acting on substantially complete applications within 120 days.11Id. at 110-17.
State qualified PPSIs that exceed $10 billion in outstanding issuance must transition to the Federal regulatory framework within 360 days or cease net issuance of new stablecoins. Such issuers may request a waiver from Federal supervision if the applicable State regulatory regime is substantially similar to Federal requirements. The proposed rule also establishes a registration process for foreign PPSIs, who must first obtain a determination from the Treasury Secretary that their home jurisdiction’s regulatory regime is comparable to the GENIUS Act framework. Foreign issuers must then register with the OCC, which will approve or reject registrations within 30 days. Registered foreign issuers must hold reserves in U.S. financial institutions sufficient to meet U.S. customer demands and consent to OCC supervision and examination.12Id. at 93-98, 119-27.
E. Custody Requirements
The proposed rule implements the Act’s requirements for the custody of payment stablecoin reserve assets, stablecoins used as collateral, and the private keys used to issue stablecoins. Covered custodians must treat custodied assets as belonging to customers and protect them from claims of the custodian’s creditors. The rule permits the use of omnibus accounts, provided that custodians separately account for each customer’s assets and maintain adequate practices for safe and sound use of such accounts. National banks, Federal savings associations, and federally qualified PPSIs with more than $10 billion in outstanding issuance that provide custodial services are subject to these requirements.13Id. at 102-09.
F. Additional Provisions of Note
The proposed rule contains several additional provisions of note:
- Redemption Requirements: Issuers must redeem stablecoins within two business days; the period extends to seven days if redemption demands exceed 10% of outstanding issuance in 24 hours.14Id. at 66-70.
- Risk Management and Governance: Issuers must maintain principles-based internal controls, independent audit functions, and board oversight of IT security programs.15Id. at 71-79.
- AML/Sanctions Compliance: Issuers are treated as financial institutions under the Bank Secrecy Act; boards must annually certify AML/sanctions program implementation.16Id. at 71, 87-88.
- Enforcement and Revocation: The OCC may revoke approval for failure to certify AML compliance; issuers failing reserve requirements for 15 consecutive days must begin redemptions.17Id. at 64-66, 127-29.
- Cybersecurity and Data Breach Notification: Issuers must notify customers and the OCC of unauthorized access to sensitive information, including private keys.18Id. at 78-79.
- Reporting and Examination: The OCC will examine issuers annually; issuers must file weekly and quarterly reports, with audited financials required for those exceeding $50 billion in issuance.19Id. at 79-89.
What’s New in the Proposed Regulations
While the proposed rule closely tracks the GENIUS Act in many respects, it introduces several novel interpretive positions and requirements that go beyond the statutory text. The rebuttable presumption regarding prohibited interest or yield payments is a significant regulatory addition. The OCC has determined that arrangements involving affiliates or “related third parties” to pay interest or yield to stablecoin holders will presumptively be treated as violations of the statutory prohibition. This approach is intended to prevent evasion of the prohibition through third-party arrangements but creates potential compliance complexity for issuers with complex affiliate structures or white-label arrangements. Issuers contemplating such arrangements should carefully review the proposed rule and consider seeking regulatory guidance.20Id. at 38-40.
The OCC has also provided detailed guidance on reserve asset liquidity and diversification that is not prescribed in the statute. The proposed requirements for immediate and weekly liquidity percentages, counterparty concentration limits, and weighted average maturity limitations were developed by the OCC to implement the Act’s general mandate for liquidity and risk management standards. The OCC has noted similarities to the SEC’s Rule 2a-7 framework for money market funds but emphasized that these requirements diverge based on inherent differences between money market funds and stablecoin issuers.21Id. at 52-62.
The proposed operational backstop requirement (12 months of operating expenses in highly liquid assets) appears to be a regulatory creation rather than a statutory mandate, though it is grounded in the OCC’s existing approach to chartering national trust banks. This requirement could impose significant liquidity costs on issuers with high operating expenses. Similarly, the OCC’s approach to capital—establishing requirements on an individualized basis during licensing rather than prescribing formulaic ratios—represents a departure from the traditional bank capital framework. While this approach provides flexibility, it may create less certainty for market participants attempting to understand the capital implications of entering the stablecoin market. The OCC has indicated that it may move toward more standardized capital requirements as the market matures.22Id. at 132, 140, 147.
Remaining Implementation Items
The OCC’s proposed rule represents only one component of the broader GENIUS Act implementation framework, and several additional regulatory actions remain pending or anticipated. Other federal regulators must issue their own implementing regulations. The FDIC has already released a proposed rule addressing application provisions, and the Board of Governors of the Federal Reserve System is expected to issue regulations applicable to entities under its jurisdiction. Treasury has issued an advance notice of proposed rulemaking and must finalize regulations governing, among other things, its determination of which foreign regulatory regimes are “comparable” to the GENIUS Act framework.23Id. at 7.
In addition, the Act contemplates that the FDIC and the National Credit Union Administration will establish limitations on the amount of deposits or insured shares that stablecoin issuers may hold at any one insured institution. These limitations have not yet been established. The OCC has also indicated that it will develop reporting templates and forms for the various reporting requirements under the proposed rule, and the agency is considering whether to publish guidance or public lists of acceptable tokenized reserve assets.24Id. at 7-8, 51.
Finally, the OCC has noted that additional regulations beyond those in the current NPRM may need to be updated in light of the GENIUS Act. For example, the agency is considering whether regulations imposing different requirements at different asset thresholds should be amended to exclude stablecoin reserves from asset calculations. Market participants should anticipate additional rulemaking activity from the OCC and other regulators as the GENIUS Act framework is fully implemented.25Id. at 8.
Implementation Timing and Effective Date
The GENIUS Act’s effective date is the earlier of 18 months after the enactment date (i.e., January 18, 2027) or 120 days after the primary federal payment stablecoin regulators issue final regulations implementing the Act. If the OCC and other regulators finalize their implementing regulations by mid-2026, the GENIUS Act framework could become effective in the fall of 2026. Certain provisions have different effective dates. For example, the prohibition on digital asset service providers offering or selling payment stablecoins not issued by PPSIs does not take effect until July 18, 2028.26Id. at 7.
Opportunity to Comment
The OCC’s proposed rule was issued on February 25, 2026, and was published in the Federal Register on March 2, 2026. Comments may be submitted through www.regulations.gov under Docket ID OCC-2025-0372. The comment period will run for 60 days, with comments due by May 1, 2026.
The OCC has specifically requested comments on over 180 questions embedded in the preamble to the proposed rule. These questions cover topics including the appropriateness of proposed definitions, the scope of the prohibition on interest or yield payments, the calibration of reserve asset liquidity requirements, capital requirements and alternatives, custody standards, examination frequency, and the treatment of foreign payment stablecoin issuers. Anyone with interests in the stablecoin market should review the proposed rule carefully and consider engaging in the comment process to shape the final regulatory framework.
Conclusion
The OCC’s proposed rule represents a significant step toward establishing a comprehensive Federal regulatory framework for payment stablecoins in the United States. The proposed regulations closely track the GENIUS Act’s statutory requirements while adding important interpretive guidance and operational details that will shape how the stablecoin market develops under Federal supervision. Key areas of focus for market participants include the stringent reserve asset requirements, the novel rebuttable presumption framework for interest and yield arrangements, and the individualized approach to capital that will be applied during the licensing process.
The regulatory landscape remains in flux as the OCC and other Federal regulators work to finalize their implementing rules. Existing stablecoin issuers, financial institutions considering entry into the stablecoin market, and digital asset service providers should begin assessing how the proposed requirements would affect their operations and business models. The comment period presents an important opportunity to engage with regulators on provisions that may require clarification or adjustment before finalization. We will continue to monitor developments in this space and provide updates as the regulatory framework evolves.