OCC Proposes Sweeping Rulemaking to Build Federal Stablecoin Framework Under the GENIUS Act

The Office of the Comptroller of the Currency (OCC) on February 25, 2026 published a comprehensive notice of proposed rulemaking (NPR) to implement the GENIUS Act, proposing an entirely new 12 CFR Part 15 that would establish federal licensing, capital, reserve, custody, and supervisory standards for payment stablecoin issuers [1][2]. The 367-page proposal, filed under Docket OCC-2025-0372, carries a 60-day comment period ending May 1, 2026, and poses more than 200 questions to the industry.

The Federal Blueprint

The GENIUS Act, signed into law on July 18, 2025, prohibits any person other than a "permitted payment stablecoin issuer" (PPSI) from issuing a payment stablecoin in the United States [1]. The OCC's NPR is the first federal agency proposal to lay out substantive prudential requirements for these issuers, and legal observers expect it to set the tone for parallel rulemakings by the FDIC and Federal Reserve [3][4].

The Act creates three domestic pathways to PPSI status: subsidiaries of insured depository institutions approved by their primary federal regulator; federal qualified payment stablecoin issuers (FQPSIs) chartered by the OCC; and state qualified payment stablecoin issuers (SQPSIs) approved by state regulators [1]. A fourth pathway allows foreign payment stablecoin issuers (FPSIs) to register with the OCC if their home jurisdiction is deemed "comparable" by the Treasury Secretary.

Reserve Requirements: Two Options on the Table

The NPR's reserve framework demands 1:1 backing at par value for all outstanding stablecoins, measured at fair value on the asset side [1][2]. Permissible reserve assets are limited to demand deposits at insured depository institutions, short-term Treasury bills with 93 days or fewer remaining maturity, certain reverse repurchase agreements, registered government money market funds, and tokenized forms of those instruments. Stablecoins and other crypto-assets are explicitly excluded.

The proposal presents two options for reserve diversification. Option A takes a principles-based approach with an optional safe harbor: at least 10% in demand deposits or Federal Reserve balances for daily liquidity, at least 30% in assets available within five business days, no more than 40% of reserves at any single financial institution, and a weighted average maturity of no more than 20 days [1]. Option B would make those same quantitative standards mandatory for all PPSIs. The OCC is soliciting comment on which approach better balances flexibility with systemic safety.

For large issuers, the stakes escalate. PPSIs with outstanding issuance of $25 billion or more must maintain at least 0.5% of reserve assets as insured deposits, subject to a cap of $500 million [1]. Reserves may not be pledged, rehypothecated, or reused except in narrowly defined circumstances. If reserves fall below the 1:1 threshold, the issuer is immediately prohibited from minting new stablecoins; a shortfall persisting beyond one business day triggers mandatory notification to the OCC.

Capital and Operational Resilience

The capital framework departs from traditional bank regulation in notable ways. PPSIs must hold Common Equity Tier 1 and additional Tier 1 capital only; Tier 2 capital is excluded [1]. During a three-year de novo period, the OCC sets individualized minimum capital amounts with a floor of $5 million. After that period, issuers self-assess capital commensurate with their risk profile.

Adam J. Cohen, Senior Deputy Comptroller and Chief Counsel, signed the bulletin accompanying the NPR. The OCC has posed open questions on several capital add-ons under consideration, including charges for foreign exchange risk, variable operational risk tied to outstanding issuance, haircuts on Treasury and repo reserves, and credit risk charges on uninsured deposits [1][2].

"The OCC is the first federal agency to propose substantive prudential requirements for payment stablecoin issuers, and the rule is likely to set the tone for the FDIC and Federal Reserve."

Each PPSI must also maintain an operational backstop: highly liquid assets equal to 12 months of total expenses, held separately from reserves [1]. Breaching capital or backstop requirements for one quarter triggers a prohibition on net new issuance; two consecutive quarters of non-compliance forces mandatory redemption and wind-down.

Applications and the Deemed-Approval Mechanism

The application process includes a mechanism novel in banking regulation. Domestic applicants file a single form-based application; each director, executive officer, and principal shareholder must submit an Interagency Biographical and Financial Report [1]. The OCC has 30 days to determine completeness, then 120 days to render a decision. If no decision is issued within that window, the application is deemed approved, a provision that legal analysts at Mayer Brown and Debevoise & Plimpton have flagged as unprecedented [3][4].

The OCC may deny applications only upon a finding of "unsafe or unsound" activities. Issuance on a public or decentralized network is explicitly not a valid basis for denial [1].

Foreign Issuer Registration

Foreign payment stablecoin issuers face their own pathway. Registration with the OCC is deemed approved on the 30th day after receipt unless the agency rejects it in writing [1]. Registered FPSIs become subject to full OCC reporting, supervision, and examination. They must maintain sufficient reserves at U.S. financial institutions to meet domestic customer liquidity needs, file monthly reports on outstanding stablecoins held by U.S. customers, and consent to the jurisdiction of federal courts and all U.S. government agencies.

The $10 Billion Threshold

State-chartered PPSIs crossing $10 billion in outstanding issuance must transition to OCC supervision within 360 days or halt net new issuance [1]. The OCC would presumptively approve waivers for states that established a digital asset regulatory regime by April 19, 2025 and approved at least one issuer. This provision could prove consequential for large state-regulated issuers such as those operating under New York's BitLicense framework.

What Comes Next

The NPR explicitly excludes Bank Secrecy Act, anti-money laundering, and OFAC sanctions standards, which will arrive in a separate coordinated rulemaking with Treasury [1][3]. The question of whether PPSI deposits at insured depository institutions qualify for pass-through FDIC deposit insurance also remains unresolved; agencies have signaled these are unlikely to be eligible [4]. With the comment period open until May 1, the rule represents the most consequential piece of U.S. stablecoin infrastructure policy to date.

References

[1] OCC Bulletin 2026-3, "Notice of Proposed Rulemaking: Payment Stablecoin Issuers," February 25, 2026. https://www.occ.treas.gov/news-issuances/bulletins/2026/bulletin-2026-3.html [2] OCC News Release NR-2026-9, February 25, 2026. https://www.occ.treas.gov/news-issuances/news-releases/2026/nr-occ-2026-9.html [3] Mayer Brown Legal Update, "OCC Proposes Comprehensive Rulemaking to Implement the GENIUS Act," March 11, 2026. https://www.mayerbrown.com/en/insights/publications/2026/03/occ-proposes-comprehensive-rulemaking-to-implement-the-genius-act [4] Debevoise & Plimpton Client Update, "OCC Issues Comprehensive GENIUS Act Rulemaking," March 2026. https://www.debevoise.com/insights/publications/2026/03/occ-issues-comprehensive-genius-act-rulemaking-pro [5] OCC NPR Full Text (PDF), February 25, 2026. https://occ.gov/news-issuances/news-releases/2026/nr-occ-2026-9a.pdf