OCC Proposes Framework for Stablecoins: A New Era for Digital Assets

On February 25, 2026, the Office of the Comptroller of the Currency (“OCC”) took an important step towards establishing a federal regulatory framework for payment stablecoin issuers by issuing a Notice of Proposed Rulemaking to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act (discussed in our blog post here). The OCC’s proposed rule (the “Proposal”) would create a comprehensive supervisory regime for permitted payment stablecoin issuers (“PPSIs”) subject to OCC oversight and establish standards for payment stablecoin issuance, reserve management, redemption, custody, capital, and risk management. 

The Proposal is the first from a federal banking agency that would establish prudential standards for payment stablecoin issuers, but not the first aimed at implementing the requirements of the GENIUS Act. In December, the Federal Deposit Insurance Corporation (“FDIC”) issued its own proposal to establish application procedures for subsidiaries of FDIC-supervised insured state nonmember banks and state savings associations seeking to issue payment stablecoins.

Below we provide an overview of the Proposal and discuss some of its key features.

The OCC’s Proposed Stablecoin Framework

The Proposal, if adopted, would delineate key requirements across several critical areas, to be codified in a new section of the Code of Federal Regulations, 12 C.F.R. Part 15:

• Scope and Applicability. The Proposal would apply to PPSIs supervised by the OCC, which, pursuant to the statute, would include subsidiaries of national banks and federal savings associations, federal-qualified PPSIs, some state-qualified PPSIs as specified in the GENIUS Act, and foreign PPSIs.
• Application and Approval Requirements. The Proposal would create licensing processes for domestic PPSIs (bank subsidiaries, federal qualified nonbank entities, uninsured national banks/federal branches) and a registration regime for foreign PPSIs.
  • Domestic PPSIs. The Proposal would require PPSIs to file an application and obtain OCC approval before issuing payment stablecoins. The OCC would be required to render a decision within 120 days of the application being substantially complete.
  • Foreign PPSIs. Foreign PPSIs would be required to demonstrate a comparable regulatory regime in their home country, hold sufficient reserves in U.S. financial institutions for U.S. customers, register with the OCC, and consent to U.S. jurisdiction for enforcement purposes.
• Transition of State-Qualified Issuers to Federal Supervision. Consistent with the GENIUS Act, the Proposal would require state-chartered payment stablecoin issuers with $10 billion or more in outstanding payment stablecoin issuance to transition to federal prudential supervision within prescribed timeframes or, if they do not, to cease issuance activity until they fall back below the $10 billion threshold. This transition mechanism reflects the apparent statutory intent to bring systemically significant payment stablecoin activity under federal oversight.
• Permitted Activities. Permitted activities for PPSIs under the Proposal would include issuing and redeeming payment stablecoins; managing reserves; providing custodial services for payment stablecoins, required reserves, or private keys; and assessing fees for related transactions.  
• Prohibited Activities. PPSIs would be prohibited from using deceptive names or marketing (e.g., implying U.S. government backing or legal tender status), or paying interest or yield on payment stablecoins. The Proposal also would restrict the rehypothecation of reserve assets, with narrow exceptions for liquidity management purposes.

  • Paying Interest or Yield. While the GENIUS Act prohibits PPSIs from offering interest or yield and financial and non-financial rewards, industry observers have argued that this prohibition can be easily evaded by indirect payments to payment stablecoin holders through side deals with partners or affiliates¹ that could offer interest or rewards.² The Proposal acknowledges that arrangements with third parties could be used to attempt to make indirect interest payments but that a general prohibition on the payment of yield could create uncertainty. 

    To address this concern, the OCC proposes to establish a rebuttable presumption that affiliate or third-party agreements designed to replicate interest or yield are inconsistent with the ban on interest payments. However, merchants would still be permitted to offer a discount to payment stablecoin holders for using payment stablecoins, and PPSIs would be permitted to share profits with partners where the issuer issues a payment stablecoin on behalf of a partner (a “white-label” arrangement). 

• Reserve Asset Requirements. The Proposal seeks to define what qualifies as a “reserve asset” and how they must be held but also requests commenter feedback on how stringent the requirements should be. Below we detail the proposed reserve asset requirements, as well as areas where commenters can provide input to shape the final rule.
  • 1:1 Backing. Permitted PPSIs would be required maintain identifiable and segregated reserve assets with a total fair value at all times equal to or exceeding the outstanding issuance value of the payment stablecoins. The Proposal asks commenters for input on whether a buffer or haircut should be required for certain reserve assets to prevent assets from decreasing in value below the GENIUS Act-mandated 1:1 basis.
  • Eligible Assets. PPSIs would be required to maintain reserves consisting exclusively of highly liquid assets such as U.S. coins and currency; funds in Federal Reserve Bank accounts or insured depository institutions; and short-term Treasury bills, notes, or bonds. Certain repurchase and reverse repurchase agreements, as well as securities from registered government money market funds, would also be permitted. The Proposal would also permit the tokenized form of some of the eligible assets to be held in reserve, with the OCC considering publishing a list of acceptable tokenized reserve assets in the future. The Proposal asks for feedback on how the eligible assets should be defined and measured.
  • Diversification and Concentration. The Proposal asks for feedback on two alternative options for diversification requirements, only one of which will be adopted for the final rule per the Proposal: a “principles-based” requirement with an optional quantitative “safe harbor” (“Option A”) or mandatory quantitative requirements for all PPSIs (“Option B”). Option B as proposed would be the “safe harbor” requirement for Option A. However, Option A would also allow PPSIs with less complex business models and lower risk profiles to maintain less diversification than more complex PPSIs. The preamble notes that Option A would provide flexibility while Option B would offer more transparency.
  • Minimum Insured Amount. PPSIs with an outstanding issuance value of $25 billion or more would be required to maintain at least 0.5% of reserve assets (up to $500 million) in insured deposits or shares at an insured depository institution.
  • Reporting and Certification. PPSIs would be required to make monthly public disclosure of reserve composition using a format “substantially similar” to a template provided in the Proposal, along with examination by a registered public accounting firm and CEO/CFO certification to the OCC also monthly. Only after the publication of this monthly disclosure would PPSIs be permitted to withdraw any excess reserve assets.
  • Consequences of Non-Compliance. A PPSI’s failure to meet reserve requirements on any day would trigger a bar on new payment stablecoin issuances until the shortfall has been remedied and could lead to liquidation of reserve assets and redemption of outstanding payment stablecoins if not resolved with 15 consecutive business days.
• Redemption Policies. PPSIs would have to publicly disclose clear redemption policies, ensuring redemptions occur no later than two business days following a request. A redemption period may be automatically extended to seven calendar days if redemption demands exceed 10% of outstanding issuance value in a single 24-hour period and the PPSI notifies the OCC within 24 hours. The OCC may also, in its discretion, extend a redemption period if it determines that the PPSI poses a threat to safety and soundness, financial stability, or such an extension would otherwise be in the public interest. The Proposal asks commenters whether the OCC should consider a longer or shorter timeframe for “timely” redemption, as well as what metrics the OCC should consider when granting an extension in times of stress.
• Risk Management. The Proposal would include “principles-based” requirements and standards covering internal controls, internal audit systems, interest rate exposure, asset growth, earnings, insider/affiliate transactions, third-party service provider oversight, and comprehensive information technology and security programs. PPSIs would need to include measures for secure digital asset handling and incident response plans with customer notification requirements in case of unauthorized access.
• Supervision and Examination. Under the Proposal, PPSIs would be subject to OCC supervisory and examination authority in much the same ways as national banks and federal savings associations. Generally, the Proposal contemplates full-scope examinations of supervised PPSIs at least annually, with an extended cycle (18–36 months) available for smaller, lower-risk entities. PPSIs would be subject to weekly confidential reporting and quarterly financial condition reports to the OCC.
• Capital and Operational Backstop. In addition to the reserve requirement described above, the Proposal would require that PPSIs hold capital to absorb potential losses not covered by the reserve.
  • Minimum Capital. The Proposal would set an individualized approach to minimum capital requirements, to be set during the chartering or licensing process, generally for a three-year “de novo period,” with a minimum of $5 million for new PPSIs. Ongoing capital would be required to be commensurate with the payment stablecoin issuer’s risk profile.
  • Operational Backstop. PPSIs would be required to maintain a separate pool of highly liquid assets equal to 12 months of total expenses to ensure continuity during business disruptions. These assets would need to be held in U.S. currency, insured demand deposits, or short-term U.S. Treasuries.

Key Takeaways

If adopted, the Proposal would have far-reaching impacts on existing payment stablecoin issuers as well as others seeking to enter the payment stablecoin market, whether as issuers or custodians. It would, most notably: 

• Bring payment stablecoin issuance firmly into a federal prudential regulatory framework, replacing the current state-based patchwork under which payment stablecoin issuers and custodians operate;
• Establish strict reserve, redemption, and disclosure requirements for PPSIs;
• Implement the statutory prohibition on payment stablecoin yield and introduce measures to prevent circumvention in the form of affiliate or third-party interest or reward programs;
• Subject PPSIs to ongoing OCC supervision roughly analogous to the existing bank framework, including licensing and capital requirements, liquidity standards, examination, governance expectations, and supervisory reporting obligations; and
• Allow a dual regulatory system for PPSIs with less than $10 billion in outstanding payment stablecoin issuance while reserving regulation of larger, systemically significant PPSIs for the OCC.

What’s Next?

In the Proposal, the OCC asks for comments on all aspects of the Proposal, including specific questions on definitions, activities, reserve assets, redemption, risk management, capital, and assessments. Comments must be submitted by May 1, 2026. The comment period offers a critical window for industry participants to provide feedback that could shape the final rule. 

The Proposal does not include proposed regulations related to the Bank Secrecy Act, Anti-Money Laundering, and Office of Foreign Asset Control sanctions, which the OCC noted in a press release will be addressed in a separate rulemaking issued jointly with the Department of the Treasury.

Other required rulemakings to implement the prudential regulatory requirements of the GENIUS Act are imminent. FDIC Chairman Travis Hill told the Senate Banking Committee on February 26 that the FDIC expects to issue proposed regulations to implement prudential requirements for FDIC-supervised PPSIs “in the near future.” Federal Reserve Board of Governors (“FRB”) Vice Chair for Supervision Michelle Bowman also testified at the same hearing and stated that the FRB is developing regulations, including capital and liquidity requirements, for PPSIs but without specifying when they may be released. The GENIUS Act requires that the federal banking agencies adopt the final regulations for PPSIs by July 18, 2026.

We will continue to monitor developments in the space and provide updates as warranted.

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1. The Proposal would define “affiliate” consistently with the definition in the Bank Holding Company Act (“BHCA”) but modified to replace “company” with “person,” though the Proposal notes the OCC would retain interpretive authority. Similarly, the Proposal would define “control” consistently with the definition in the BHCA with the OCC retaining interpretive authority; the Proposal asks for feedback on whether this definition of “control” is sufficiently clear.
2. The CLARITY Act, the market structure legislation, has been held up by debates between traditional banks and the crypto industry on the permissibility of payment stablecoin yield payments, so a definitive regulatory answer may clear the path for the CLARITY Act to progress through Congress.