SIFMA Recommends OCC Ease Proposed Rules for Payment Stablecoin Issuers

SIFMA recommended significant revisions to the OCC's proposed framework for regulating payment stablecoins under the Guiding and Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act - with changes to reserve management, redemption rules, custody standards and capital requirements.

In a comment letter responding to the OCC proposed rulemaking, SIFMA recommended, among other things, the following:

On reserves, SIFMA urged the OCC to extend the weighted average maturity limit from 20 to 60 days, removing custody assets from the 40 percent single-institution concentration cap, and broadening liquidity requirements to cover any eligible reserve asset convertible to cash within five business days. SIFMA also wants tokenized reserve assets confirmed as eligible, and argued that money market funds holding GENIUS Act-permitted assets should receive capital treatment reflecting their underlying risk profile rather than a more conservative overlay.

On redemptions, SIFMA urged the OCC to scrap the proposed automatic seven-day redemption extension that kicks in when outflows exceed 10 percent. SIFMA warned that the trigger could actually accelerate runs by encouraging investors to redeem preemptively, with knock-on consequences for short-dated Treasury and repo markets.

On custody, SIFMA urged stronger capital requirements governing self-custody, clearer alignment with existing broker-dealer standards, and explicit OCC coordination with the SEC, FINRA, and the FDIC on segregation rules and the deposit status of reserve cash. SIFMA also recommended that the OCC clarify the territorial reach of the proposal’s custody requirements to avoid unintended extraterritorial application to U.S. custodians that appear in a global custody chain without meaningful U.S. nexus.  Further, SIFMA called on the OCC to coordinate with the SEC and FINRA to prevent conflicting standards across regulatory regimes.

SIFMA emphasized that the OCC should apply a “same risk, same activity, same regulatory outcome” principle across issuer types and coordinate closely with other GENIUS Act regulatory agencies, as well as with the SEC and the CFTC, to ensure consistent standards across the payment stablecoin ecosystem. SIFMA warned that regulatory divergence could create arbitrage opportunities, burden bank-affiliated issuers with duplicative obligations, and ultimately discourage the bank participation that policymakers say they want to encourage in the nascent stablecoin market.