OCC Proposes Regulatory Framework for Payment Stablecoin Issuers

The Office of the Comptroller of the Currency ("OCC") proposed regulations to establish a comprehensive licensing, supervisory, and operational regime for (i) insured national banks, federal savings associations, and insured federal branches seeking to issue payment stablecoins through a subsidiary and (ii) nonbank entities, uninsured national banks, and uninsured federal branches seeking to issue payment stablecoins as federal qualified payment stablecoin issuers.

The proposal would add a new 12 CFR Part 15, consistent with the GENIUS Act, to ensure that payment stablecoins are backed by sufficient reserves, payment stablecoin issuers maintain adequate capital and liquidity, and are subject to appropriate supervision, and consumers are protected through strict redemption and disclosure requirements.

The proposed regulations mandate that insured national banks and federal savings associations cannot issue payment stablecoins directly and must utilize a subsidiary structure to operate as a "Permitted Payment Stablecoin Issuer." Uninsured national banks and nonbank entities may apply to the OCC to issue stablecoins directly.

Among other things, the proposal includes:

• Strict Reserve Composition and Diversification: Permitted payment stablecoin issuers would be required to maintain a 1-to-1 backing of outstanding stablecoins to fairly valued, highly liquid reserve assets. Permissible reserves are limited to, among other things, U.S. coins and currency, insured demand deposits, U.S. Treasury securities with maturities of 93 days or less, funds received in connection with repurchase agreements with overnight maturities and collateralized by U.S. Treasury securities, and certain securities issued by registered investment companies. The proposal includes concentration limits to prevent over-reliance on a single depository institution.
• Timely Redemption Requirements: Issuers must adopt policies to redeem stablecoins at par value within two business days of a request. This period is extended to seven calendar days if an issuer faces severe stress, defined as redemption demands exceeding "10 percent of its outstanding issuance value in a single 24-hour period."
• Prohibition on Yield: Stablecoin issuers are prohibited from paying any form of interest or yield to stablecoin holders. The OCC includes a rebuttable presumption to prevent issuers from using affiliates or third-party "white-label" partners to evade this restriction.
• Tailored Capital and Operational Backstops: New issuers must hold a minimum of $5 million in initial capital. Additionally, all issuers must maintain a highly liquid "operational backstop" equal to 12 months of operating expenses to ensure stability and cover costs during potential business disruptions.
• Custodial Safekeeping Standards: The proposal outlines minimum principles-based requirements for the custody of "covered assets," which include reserves and private keys, mandating the segregation of customer assets and explicit "protect[ion] from ... [the] claims of the custodian's creditors."
• Reporting and Auditing: Issuers will be subject to full-scope OCC examinations at least once every 12 months, or 18-to-36 months for smaller issuers. The rule also mandates weekly confidential data reporting to the OCC, quarterly financial reporting, and the "publication of a monthly reserve composition report" that must be certified by executives and examined by a registered public accounting firm.
• Foreign and State Issuer Frameworks: The rule establishes a registration process for foreign payment stablecoin issuers to operate in the U.S. based on comparability determinations, and creates a transition framework for state-qualified nonbank issuers that exceed $10 billion in outstanding issuance, requiring them to transition to federal OCC oversight or explicitly apply for a waiver.

The OCC noted that its tailored approach is designed to reflect the specific operational and run risks of stablecoin issuance rather than traditional banking credit risks. As such, the proposal amends OCC assessment rules to grant a 35% assessment fee discount for stablecoin reserve assets and allows uninsured national trust banks to opt into the Part 15 capital framework rather than complying with traditional bank leverage and risk-based capital ratios.

Comments on the proposed rule must be received within 60 days after its publication in the Federal Register.