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Proposed Rule2026-04089

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

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Published

March 2, 2026

Issuing agencies

Treasury DepartmentComptroller of the Currency

Abstract

The Office of the Comptroller of the Currency (OCC) proposes to issue regulations to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act regarding the issuance of payment stablecoins and certain related activities by entities subject to the OCC's jurisdiction.

Full Text

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<title>Federal Register, Volume 91 Issue 40 (Monday, March 2, 2026)</title>
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<body><pre>
[Federal Register Volume 91, Number 40 (Monday, March 2, 2026)]
[Proposed Rules]
[Pages 10202-10303]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04089]

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Vol. 91

Monday,

No. 40

March 2, 2026

Part II

Department of the Treasury

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Office of the Comptroller of the Currency

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12 CFR Parts 3, 6, 8, et al.

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;
Proposed Rule

Federal Register / Vol. 91, No. 40 / Monday, March 2, 2026 / Proposed
Rules

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 3, 6, 8, 15, and 19

[Docket ID OCC-2025-0372]
RIN 1557-AF41

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

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) proposes
to issue regulations to implement the Guiding and Establishing National
Innovation for U.S. Stablecoins Act regarding the issuance of payment
stablecoins and certain related activities by entities subject to the
OCC's jurisdiction.

DATES: Comments must be received by May 1, 2026.

ADDRESSES: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal. Please use the title ``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'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
<bullet> Federal eRulemaking Portal--<a href="http://Regulations.gov">Regulations.gov</a>:
Go to <a href="https://regulations.gov/">https://regulations.gov/</a>. Enter Docket ID ``OCC-2025-0372''
in the Search Box and click ``Search.'' Public comments can be
submitted via the ``Comment'' box below the displayed document
information or by clicking on the document title and then clicking the
``Comment'' box on the top-left side of the screen. For help with
submitting effective comments please click on ``Commenter's
Checklist.'' For assistance with the <a href="http://Regulations.gov">Regulations.gov</a> site, please call
1-866-498-2945 (toll free) Monday-Friday, 9 a.m.-5 p.m. ET, or email
<a href="/cdn-cgi/l/email-protection#86f4e3e1f3eae7f2efe9e8f5eee3eaf6e2e3f5edc6e1f5e7a8e1e9f0"><span class="__cf_email__" data-cfemail="87f5e2e0f2ebe6f3eee8e9f4efe2ebf7e3e2f4ecc7e0f4e6a9e0e8f1">[email&#160;protected]</span></a>.
<bullet> Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 1E-216, Washington, DC 20219.
<bullet> Hand Delivery/Courier: 400 7th Street SW, Suite 1E-216,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
Docket ID ``OCC-2025-0372'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the <a href="http://Regulations.gov">Regulations.gov</a> website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
<bullet> Viewing Comments Electronically--<a href="http://Regulations.gov">Regulations.gov</a>: Go to
<a href="https://regulations.gov/">https://regulations.gov/</a>. Enter Docket ID ``OCC-2025-0372'' in the
Search Box and click ``Search.'' Click on the ``Documents'' tab and
then the document's title. After clicking the document's title, click
the ``Document Comments'' tab. Comments can be viewed and filtered by
clicking on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Results'' options on the left side of the screen.
Supporting materials can be viewed by clicking on the ``Documents''
tab. Click on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Documents Results'' options on the left side of the
screen checking the ``Supporting & Related Material'' checkbox. For
assistance with the <a href="http://Regulations.gov">Regulations.gov</a> site, please call 1-866-498-2945
(toll free) Monday-Friday, 9 a.m.-5 p.m. ET, or email
<a href="/cdn-cgi/l/email-protection#fc8e999b89909d889593928f9499908c98998f97bc9b8f9dd29b938a"><span class="__cf_email__" data-cfemail="07756260726b66736e6869746f626b776362746c4760746629606871">[email&#160;protected]</span></a>.
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.

FOR FURTHER INFORMATION CONTACT: Sarah Turney, Assistant Director,
Henry Barkhausen, Counsel, Daniel Borman, Counsel, Marjorie Dieter,
Counsel, or Mark O'Horo, Special Counsel, Chief Counsel's Office, 202-
649-5490, or David Stankiewicz, Director, Office of Financial
Technology, Office of the Chief National Bank Examiner, 202-649-5473,
Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.

SUPPLEMENTARY INFORMATION:

I. Background

The Guiding and Establishing National Innovation for U.S.
Stablecoins Act (12 U.S.C. 5901 et seq.) (GENIUS Act or the Act) was
enacted on July 18, 2025. The Act establishes a regulatory framework
for payment stablecoin activities. Stablecoins are digital assets,
i.e., digital representations of value recorded on a cryptographically
secured distributed ledger,\1\ such as a blockchain.\2\ In contrast to
many other types of digital assets, stablecoins are intended to
maintain a stable value relative to a reference asset, most often fiat
currency.\3\ Most stablecoin issuers use a pool of high quality and
highly liquid reserve assets to back the stablecoin and maintain a
stable value.\4\ Stablecoins often rely on smart contracts (i.e., self-
executing programs that automatically enforce agreements between users)
for different aspects of their functionality.\5\ When an issuer redeems
a tendered stablecoin, it typically accepts a stablecoin from a user or
third party in exchange for a fixed amount of monetary value, e.g., one
dollar.\6\ Stablecoins are frequently used to facilitate trading in
digital assets and may be used for retail and institutional
payments.\7\ Certain stablecoin issuers have the capability to freeze
funds or block transactions involving their stablecoin, which they may
do, for example, to effectuate a court order.\8\
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\1\ 12 U.S.C. 5901(6).
\2\ White House, ``Strengthening American Leadership in Digital
Financial Technology,'' at 15 (July 17, 2025), [hereinafter, Digital
Financial Technology Report], <a href="https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf">https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf</a>. A
cryptographically secured ledger uses cryptography to maintain the
integrity of the ledger. See also E.O. No. 14178, Strengthening
American Leadership in Digital Financial Technology, 90 FR 8647
(January 31, 2025) (defining blockchain to mean ``any technology
where data is: (i) shared across a network to create a public ledger
of verified transactions or information among network participants;
(ii) linked using cryptography to maintain the integrity of the
public ledger and to execute other functions; (iii) distributed
among network participants in an automated fashion to concurrently
update network participants on the state of the public ledger and
any other functions; and (iv) composed of source code that is
publicly available'').
\3\ Digital Financial Technology Report at 88, 130.
\4\ See id. at 90.
\5\ See id. at 11.
\6\ Currently, rather than mint or redeem stablecoins through
the issuer, most market participants rely on digital asset trading
platforms to exchange stablecoins for national currencies (or even
other stablecoins).
\7\ Id. at 93.
\8\ See id. at 105.
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The Act focuses on a subset of stablecoins: payment stablecoins.
Under section 2(22) of the Act (12 U.S.C. 5901(22)), ``payment
stablecoin'' means ``a digital asset--(i) that is, or is designed to
be, used as a means of payment or settlement; and (ii) the

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issuer of which--(I) is obligated to convert, redeem, or repurchase for
a fixed amount of monetary value, not including a digital asset
denominated in a fixed amount of monetary value; and (II) represents
that such issuer will maintain, or create the reasonable expectation
that it will maintain, a stable value relative to the value of a fixed
amount of monetary value[.]'' The term does not include a digital asset
that is (i) a national currency; (ii) a deposit (as defined in 12
U.S.C. 1813), including a deposit recorded using distributed ledger
technology; or (iii) a security, as defined in 15 U.S.C. 77b, 78c, or
80a-2.\9\
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\9\ The Act provides that, for the avoidance of doubt, no bond,
note, evidence of indebtedness, or investment contract that was
issued by a permitted payment stablecoin issuer shall qualify as a
security solely by virtue of its satisfying the conditions described
in section 2(22)(A) of the Act, consistent with section 17 of the
Act. 12 U.S.C. 5901(22)(B)(iii).
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The Act generally prohibits any person other than a permitted
payment stablecoin issuer from issuing a payment stablecoin in the
United States.\10\ It further prohibits digital asset service providers
\11\ from offering or selling a payment stablecoin to a person in the
United States unless the issuer is a permitted payment stablecoin
issuer or the issuer is a foreign payment stablecoin issuer that meets
certain requirements.\12\ The Act sets forth various regulatory and
licensing requirements for permitted payment stablecoin issuers and
foreign payment stablecoin issuers. In many instances, the Act states
that the specific requirements applicable to these entities (e.g.,
those related to capital, liquidity, operational risk management),
shall be set forth by regulations issued by the relevant primary
Federal payment stablecoin regulator, in coordination with other
relevant agencies, as appropriate.\13\ This notice of proposed
rulemaking represents one piece of the GENIUS Act's implementing
regulations.\14\
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\10\ See 12 U.S.C. 5902(a). See also 12 U.S.C. 5916 (excepting
foreign payment stablecoin issuers that meet certain requirements
from the prohibition in section 3 of the Act).
\11\ ``Digital asset service provider'' means a person that, for
compensation or profit, engages in the business in the United States
(including on behalf of customers or users in the United States) of:
(1) exchanging digital assets for monetary value; (2) exchanging
digital assets for other digital assets; (3) transferring digital
assets to a third party; (4) acting as a digital asset custodian; or
(5) participating in financial services relating to digital asset
issuance. See 12 U.S.C. 5901(7). The term ``digital asset service
provider'' does not include (1) a distributed ledger protocol; (2)
an immutable and self-custodial software interface; or (3) a person
solely by virtue of their (A) developing, operating, or engaging in
the business of developing distributed ledger protocols or self-
custodial software interfaces; (B) developing, operating, or
engaging in the business of validating transactions or operating a
distributed ledger; or (C) participating in a liquidity pool or
other similar mechanism for the provisioning of liquidity for peer-
to-peer transactions. See id. A liquidity pool is a portfolio of
digital assets that is algorithmically bound and traded based on
smart contracts. Liquidity providers and takers interact with
liquidity pools by adding assets that the liquidity pools trade and
receive a liquidity pool token in return that is proportionate to
the percentage of assets they have contributed to the liquidity
pool. Digital Financial Technology Report at 23.
\12\ The prohibition against digital asset service providers
offering or selling payment stablecoins that are not issued by
permitted payment stablecoin issuers begins on July 18, 2028. See 12
U.S.C. 5902(b)(1). The prohibition against digital asset service
providers offering or selling payment stablecoins that are not
issued by foreign payment stablecoin issuers that meet certain
requirements goes into effect as of the effective date of the GENIUS
Act. See 12 U.S.C. 5902(b)(2). The prohibitions that apply to a
digital asset service provider would apply to an issuer to the
extent that the issuer is a digital asset service provider.
\13\ See, e.g., 12 U.S.C. 5903(a)(4), (b), (h).
\14\ For example, on September 19, 2025, the Department of the
Treasury issued an advance notice of proposed rulemaking concerning
the GENIUS Act. See 90 FR 45159 (September 19, 2025). On December
19, 2025, the FDIC released a notice of proposed rulemaking related
to certain application provisions under the GENIUS Act. 90 FR 59409
(December 19, 2025).
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The OCC will have regulatory or enforcement authority over certain
permitted payment stablecoin issuers, including subsidiaries of
national banks or Federal savings associations, Federal qualified
payment stablecoin issuers, and State qualified payment stablecoin
issuers subject to the OCC's regulatory or enforcement authority under
section 4 or 7 of the GENIUS Act (12 U.S.C. 5903 and 5906). In
addition, the OCC will have regulatory authority over foreign payment
stablecoin issuers. This notice of proposed rulemaking generally sets
forth, and seeks comment on, the regulations that would apply to
permitted payment stablecoin issuers and foreign payment stablecoin
issuers under the OCC's jurisdiction as well as certain custody
activities conducted by OCC-supervised entities. These proposed
regulations do not address stablecoins that do not qualify as payment
stablecoins or issuers for which the OCC does not have regulatory or
enforcement authority.
The GENIUS Act's effective date is the earlier of 18 months after
the enactment date (July 18, 2025) or 120 days after the primary
Federal payment stablecoin regulators issue final regulations
implementing the Act. The OCC anticipates that these implementing
regulations will be updated, as necessary, in the years following the
effective date of the GENIUS Act as the business practices of permitted
payment stablecoin issuers and foreign payment stablecoin issuers
continue to evolve and develop. In addition, other regulations beyond
those addressed in this rulemaking may need to be updated in light of
the passage of the GENIUS Act. For example, the OCC is considering
whether certain regulations that impose different requirements at
different asset thresholds should be amended to exclude stablecoin
reserves from the asset calculation.

A. Self-Executing Provisions

The GENIUS Act includes a number of self-executing provisions that
are not addressed in this rulemaking. For example, the Act includes
several provisions addressing the applicability of State law to
permitted payment stablecoin issuers. These provisions: clarify the
exclusive role of the OCC in overseeing Federal qualified payment
stablecoin issuers; ensure that Federal qualified payment stablecoin
issuers and subsidiaries of OCC-regulated insured depository
institutions approved to be permitted payment stablecoin issuers are
subject to only one licensing requirement--the OCC's; and address the
effect of the GENIUS Act on State consumer protection laws.
Section 4(b)(1) of the GENIUS Act (12 U.S.C. 5903(b)(1)) states
that, notwithstanding certain Federal law addressing preemption
standards for OCC-regulated institutions,\15\ and certain State laws, a
Federal qualified payment stablecoin issuer ``shall be licensed,
regulated, examined, and supervised exclusively by the Comptroller.''
This provision provides the OCC with the exclusive authority to
exercise visitorial powers with respect to Federal qualified payment
stablecoin issuers, consistent with the agency's authority in 12 U.S.C.
484.\16\ This exclusivity generally prevents other regulators from
subjecting these entities to additional oversight, which can be unduly
burdensome, duplicative, or inconsistent.\17\ In addition, based on the
exclusivity granted to the OCC, section 4(b) preempts certain State
laws with

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respect to Federal qualified payment stablecoin issuers.
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\15\ Specifically, 12 U.S.C. 25b and 1465 respectively address
the preemption standards applicable to national banks and Federal
savings associations and their subsidiaries.
\16\ Although the GENIUS Act does not specifically use the term
``visitorial powers,'' its plain language is consistent with the
Supreme Court's description of visitorial authority. See Cuomo v.
Clearing House Ass'n, L.L.C., 557 U.S. 519, 526 (2009) (describing
visitation as the exercise of ``general supervision'') (emphasis
added); see also 12 CFR 7.4000(a)(2) (describing the OCC's
visitorial powers with respect to national banks).
\17\ Twelve U.S.C. 484 would also continue to apply to uninsured
national banks and Federal branches that become permitted payment
stablecoin issuers.
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Section 5(h) of the GENIUS Act (12 U.S.C. 5904(h)) expressly
preempts ``any State requirement for a charter, license, or other
authorization to do business with respect to a'' Federal qualified
payment stablecoin issuer or a subsidiary of an OCC-regulated insured
depository institution approved to be a permitted payment stablecoin
issuer. As a result, these entities are only required to obtain
authorization to do business from the OCC, which reduces the
unnecessary complexity that would result from requiring these entities
to also obtain a charter, license, or other authorization from one or
more States. Section 7(f)(4) of the GENIUS Act (12 U.S.C. 5906(f)(4))
provides that nothing in the GENIUS Act preempts State consumer
protection laws.\18\
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\18\ Depending on the circumstances, other Federal law, such as
the National Bank Act and the Home Owners' Loan Act, may also be
relevant in assessing the applicability of State law, including a
State consumer protection law, to certain permitted payment
stablecoin issuers, such as uninsured national banks.
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Together, these GENIUS Act provisions establish a framework for
assessing the applicability of State law to a Federal qualified payment
stablecoin issuer or a subsidiary of an OCC-regulated insured
depository institution approved to be permitted payment stablecoin
issuer.\19\ Because these GENIUS Act provisions are self-executing, the
OCC is not proposing regulatory text to implement them. However, the
agency invites public comment on all aspects of this framework,
including whether the self-executing provisions of the Act should be
codified in the OCC's regulations for convenience.
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\19\ The GENIUS Act also addresses the applicability of State
law to State qualified payment stablecoin issuers. See, e.g.,
section 7(f) of the Act (12 U.S.C. 5906(f)).
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Among other self-executing provisions, section 4(g) of the GENIUS
Act (12 U.S.C. 5903(g)) provides that a Federal savings association
established under the Home Owners' Loan Act (12 U.S.C. 1461 et seq.)
that holds a reserve that satisfies the requirements of section 4(a)(1)
of the GENIUS Act shall not be required to satisfy the qualified thrift
lender test under section 10(m) of the Home Owners' Loan Act (12 U.S.C.
1467a(m)) \20\ with respect to such reserve assets. Because this
provision is self-executing, the OCC is not proposing regulatory text
to implement section 4(g).
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\20\ A Federal savings association is generally required to be
qualified thrift lender. A Federal savings association is a
qualified thrift lender if it meets one of the following qualified
thrift lender tests: (1) it qualifies as a domestic building and
loan association as defined in 26 U.S.C. 7701(a)(19); or (2) its
qualified thrift investments equal or exceed 65 percent of its
portfolio assets, and its qualified thrift investments continue to
equal or exceed 65 percent of its portfolio assets on a monthly
average basis in nine out of every 12 months.
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II. Description of the Proposed Rule

A. Subpart A--Purpose, Scope, Definitions, and Severability

Subpart A of the proposed rules provides the purpose and scope and
defines terms used throughout the proposed rule.
1. Purpose and Scope (Proposed Sec. 15.1)
Proposed Sec. 15.1 sets forth the purpose and scope of the
stablecoin-related regulations. Paragraph (a) describes the purpose,
which is to implement the GENIUS Act, 12 U.S.C. 5901 et seq., with
respect to entities for which the OCC is authorized to issue
regulations or exercise its enforcement authority under the Act. These
entities are listed in the proposed scope provision in paragraph (b),
which provides that proposed part 15 would apply to activities related
to payment stablecoins and certain custody activities of (1) national
banks and their subsidiaries; (2) Federal savings associations and
their subsidiaries; (3) Federal branches and their subsidiaries; (4)
Foreign payment stablecoin issuers; (5) nonbank entities that seek to
be or are approved as Federal qualified payment stablecoin issuers; and
(6) State qualified payment stablecoin issuers for whom the OCC has
regulatory or enforcement authority pursuant to proposed Sec. 15.15 or
Sec. 15.16. Thus, except where otherwise noted, references in part 15
to permitted payment stablecoin issuers would only apply to these types
of listed entities despite the broader scope of the term in the GENIUS
Act.
As described in the section-by-section analysis below, proposed
subparts B and E would apply to permitted payment stablecoin issuers
that are subsidiaries of insured national banks, subsidiaries of
Federal savings associations, uninsured national banks, Federal
branches or subsidiaries thereof, nonbank entities that are not State
qualified payment stablecoin issuers, and State qualified payment
stablecoin issuers for whom the OCC has regulatory or enforcement
authority. Proposed subpart C would apply to national banks, Federal
savings associations, Federal branches, Federal qualified payment
stablecoin issuers, and State qualified payment stablecoin issuers with
an outstanding issuance of more than $10 billion subject to supervision
and regulation by the OCC who provide custodial or safekeeping services
for payment stablecoins, reserve assets, and other ``covered assets''
(described in detail in subpart C). The application and registration
sections in proposed subpart D would apply to insured national banks,
Federal savings associations, or Federal branches that seek to issue
payment stablecoins through a subsidiary; nonbank entities that seek to
be Federal qualified payment stablecoin issuers, uninsured national
banks, and uninsured Federal branches that seek to be Federal qualified
payment stablecoin issuers; and entities that seek to register as
foreign payment stablecoin issuers. The capital requirements detailed
in proposed subpart E would apply to subsidiaries of insured national
banks, subsidiaries of Federal savings associations, uninsured national
banks, Federal branches or subsidiaries thereof, nonbank entities that
are not State qualified payment stablecoin issuers, and State qualified
payment stablecoin issuers for whom the OCC has regulatory authority.
2. Definitions (Proposed Sec. 15.2)
Proposed section 15.2 contains the following definitions of terms
used throughout proposed part 15, many of which are included in or
based on the definitions in the GENIUS Act, 12 U.S.C. 5901.\21\
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\21\ The definitions in proposed Sec. 15.2 describe only terms
used in proposed part 15. These definitions do not interpret terms
for purposes of any other statute or regulation and are not issued
pursuant to section 3(d) of the GENIUS Act (12 U.S.C. 5902(d)).
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Affiliate. The OCC is proposing to define the term ``affiliate''
consistent with the definition in the Bank Holding Company Act, 12
U.S.C. 1841(k), but modified to use the defined term ``person'' in
place of the term ``company.'' \22\ Under the proposed rule, the term
``affiliate'' would mean a person that controls, is controlled by, or
is under common control with another person. The OCC believes the
proposed definition of affiliate would include the appropriate
individuals and entities that could be involved in payment stablecoin
issuance.
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\22\ While the proposed definition of ``affiliate'' is
consistent with the definition in the Bank Holding Company Act, the
OCC would retain interpretive authority with respect to this
definition for purposes of proposed 12 CFR part 15. The OCC
generally expects that it would interpret questions regarding the
definition of ``affiliate'' consistent with the provisions of 12 CFR
part 225 as of the date of this issuance.
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Bank Secrecy Act. The OCC is proposing to define the term ``Bank
Secrecy Act'' consistent with the definition provided in the GENIUS
Act, 12 U.S.C. 5901(2). Under the proposal,

[[Page 10205]]

the term ``Bank Secrecy Act'' would mean: (1) section 21 of the Federal
Deposit Insurance Act (12 U.S.C. 1829b); (2) chapter 2 of title I of
Public Law 91-508 (12 U.S.C. 1951 et seq.); and (3) subchapter II of
chapter 53 of title 31, United States Code and notes thereto (31 U.S.C.
5311 et seq.). The proposal would add the phrase ``and notes thereto''
as a clarification.
Board of directors. Under the proposed rule, ``board of directors''
would mean a payment stablecoin issuer's or applicant's board of
directors or the group of individuals that serve the nearest equivalent
function of acting as the governing body of the issuer or applicant.
The proposed definition captures the persons responsible for certain
requirements under proposed part 15, including for permitted payment
stablecoin issuers that do not have a board of directors as that term
is commonly understood.
Control. The OCC is defining ``control'' such that a person would
control another person if: (1) the person directly or indirectly or
acting through one or more other persons owns, controls, or has power
to vote 25 percent or more of any class of voting securities of the
other person; (2) the person controls in any manner the election of a
majority of the directors or trustees of the other person; or (3) the
OCC determines, after notice and opportunity for hearing, that the
person directly or indirectly exercises a controlling influence over
the management or policies of the other person. Like the definition of
``affiliate,'' the proposed definition of ``control'' is generally
consistent with the Bank Holding Company Act.\23\ The OCC notes that
proposed Sec. 15.14 would include certain provisions regarding changes
in control that would refer to the use of that term under 12 CFR 5.50,
rather than under the Bank Holding Company Act. Thus, for purposes of
those provisions, permitted payment stablecoin issuers should refer to
12 CFR 5.50.
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\23\ While the proposed definition of control is consistent with
the definition in the Bank Holding Company Act, the OCC would retain
interpretive authority with respect to this definition for purposes
of proposed 12 CFR part 15. The OCC generally expects that it would
interpret questions regarding the definition of ``control''
consistent with the provisions of 12 CFR part 225, including those
relating to the presumption of control, as of the date of this
issuance.
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Customer. The OCC is proposing to define the term ``customer'' to
mean a person that purchases (through any consideration) the products
or services of another person. This term appears in a variety of
different contexts in the proposed rule, so the OCC has proposed a
broad definition for the term. The definition for purposes of the
proposed rule is not intended to affect any customer identification
program or customer due diligence rules.
Deposit. The OCC is proposing to define the term ``deposit'' to
have the same meaning as deposit in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813(l)).
Depository institution. The OCC is proposing to define the term
``depository institution'' to mean a depository institution as that
term is defined in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813(c)(1)) or a credit union. The OCC is proposing this
definition to improve clarity because, although the GENIUS Act uses the
term ``depository institution,'' it is not defined in section 2 of the
Act (12 U.S.C. 5901). Section 11(g) of the Act (12 U.S.C. 5911) does,
however, refer to the Federal Deposit Insurance Act's definition.\24\
The OCC believes that incorporating this definition will promote
clarity and consistency. Under the Federal Deposit Insurance Act, the
term ``depository institution'' means any bank or savings association,
which are both defined terms under that statute, and would be
incorporated herein to determine whether an institution is a depository
institution for purposes of proposed part 15. The OCC is proposing to
include a reference to credit unions consistent with the approach that
the GENIUS Act took with respect to the definition of ``insured
depository institution,'' defined below, and which explicitly includes
insured credit unions. This term is particularly relevant with respect
to the OCC's jurisdiction over certain nonbank entities under sections
2(25), 4(d), and 7(e) of the Act (12 U.S.C. 5901(25), 5903(d), and
5906(e)).
---------------------------------------------------------------------------

\24\ The proposed definition of ``depository institution'' for
purposes of part 15 would not affect the meaning of the term under
section 11(g) of the GENIUS Act (12 U.S.C. 5911).
---------------------------------------------------------------------------

Digital asset. The OCC is proposing to define the term ``digital
asset'' as provided in section 2(6) of the GENIUS Act (12 U.S.C.
5901(6)). Under the proposed rule, the term ``digital asset'' would
mean any digital representation of value that is recorded on a
cryptographically secured distributed ledger.
Director. The OCC is proposing to define the term ``director'' for
purposes of this proposed part to mean an individual who serves on the
board of directors of a permitted payment stablecoin issuer or
applicant, except an advisory director who does not have the authority
to vote on matters before the board of directors or any committee of
the board of directors and provides solely general policy advice to the
board of directors or any committee. The OCC based the proposed
definition on the definition included in 12 CFR 5.51. The proposed
definition has been modified from that in 12 CFR 5.51 to remove the
exclusion for a director of a foreign bank that operates a Federal
branch. The OCC determined that this language is unnecessary in light
of the proposed definition of the term ``board of directors.'' As
described above, to address the various organizational forms used by
permitted payment stablecoin issuers and applicants, including those
that do not have a traditional board of directors, the OCC is proposing
to define the term ``board of directors'' in this proposed part to
include a group of individuals that serve the nearest equivalent
function of acting as the governing body of the issuer or applicant.
For a Federal branch, individuals who would meet the proposed
definition of ``director'' would include individuals that are part of
that group. Further, the directors of Federal branches would not
include individuals who serve on the board of directors of the foreign
bank but who do not serve in the equivalent capacity with respect to
the Federal branch.
Distributed ledger. The OCC is proposing to define the term
``distributed ledger'' as provided in the GENIUS Act, 12 U.S.C.
5901(8), with certain technical edits. The proposed rule would define
the term ``distributed ledger'' to mean technology in which (1) data is
shared across a network that creates a public digital ledger of
verified transactions or information among network participants and (2)
cryptography is used to link the data to maintain the integrity of the
public ledger and execute other functions. The proposed definition
reformats the definition in the GENIUS Act by using numbering to
distinguish between the two components of the definition. The
formatting changes are technical and do not have a substantive effect
on the definition.
Distributed ledger protocol. The OCC is proposing to define the
term ``distributed ledger protocol'' as provided in the GENIUS Act, 12
U.S.C. 5901(9). The term ``distributed ledger protocol'' would mean
publicly available and accessible executable software deployed to a
distributed ledger, including smart contracts or networks of smart
contracts.
Eligible financial institution. The OCC is proposing to define
``eligible financial institution'' to mean (1) a person that (a) is
eligible to hold reserve assets in custody under section 10(a) of the

[[Page 10206]]

GENIUS Act (12 U.S.C. 5909(a)); (b) complies with the applicable
requirements in section 10(b), (c), and (d) of the GENIUS Act (12
U.S.C. 5909(b), (c) and (d)), including with applicable implementing
regulations issued by a relevant Federal payment stablecoin regulator
as defined in 12 U.S.C. 5901(25), primary financial regulatory agency
described in 12 U.S.C. 5301(12)(B) or (C), State bank supervisor, or
State credit union supervisor; and (c), if applicable, enters into a
custody agreement with a permitted payment stablecoin issuer
documenting the person's compliance with section 10(b), (c) and (d) of
the Act as well as policies and procedures to ensure compliance; or (2)
a Federal Reserve Bank.
The term ``eligible financial institution'' is relevant to the
reserve asset diversification and concentration requirements in
proposed Sec. 15.11(c) of the proposed rule. Under section 10(a) of
the GENIUS Act, a person may only engage in the business of providing
custodial or safekeeping services for the payment stablecoin reserve,
the payment stablecoins used as collateral, or the private keys used to
issue payment stablecoins if the person (1) is subject to (A)
supervision or regulation by a primary Federal payment stablecoin
regulator or a primary financial regulatory agency described under
subparagraph (B) or (C) of section 2(12) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5301(12)); or (B)
supervision by a State bank supervisor, as defined under section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813), or a State credit
union supervisor, as defined under section 6003 of the Anti-Money
Laundering Act of 2020 (31 U.S.C. 5311 note), and such State bank
supervisor or State credit union supervisor makes available to the
Federal Reserve such information as the Federal Reserve determines
necessary and relevant to the categories of information under section
10(d) of the Act; and (2) complies with the requirements under section
10(b), unless such person holds such property in accordance with
similar requirements as required by a primary Federal payment
stablecoin regulator, the Securities and Exchange Commission, or the
Commodity Futures Trading Commission.
Eligible financial institutions would include insured depository
institutions and national banks regardless of whether the entities
engaged in stablecoin activities or provided custody services to
permitted payment stablecoin issuers because these entities are subject
to supervision or regulation by a primary Federal payment stablecoin
regulator. Thus, for example, under proposed Sec. 15.11(c) a permitted
payment stablecoin issuer could hold reserves as deposits at a national
bank regardless of whether the national bank acted as custodian for the
permitted payment stablecoin issuer's other reserve assets.
To meet the proposed definition, a financial institution must also
comply with the applicable requirements of section 10 of the Act (12
U.S.C. 5909), and the relevant custody agreement must reflect
compliance with section 10 as well as policies and procedures to ensure
such compliance.\25\ These criteria are intended to ensure compliance
with section 10 of the Act and to encourage appropriate due diligence
of entities that hold reserve assets for permitted payment stablecoin
issuers.
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\25\ As discussed above, to the extent that an eligible
financial institution does not engage in custody of covered assets,
section 10 of the GENIUS Act (12 U.S.C. 5909) would not apply.
---------------------------------------------------------------------------

The OCC recognizes that multiple agencies will regulate stablecoin
issuers and that multiple agencies regulate the entities that may
permissibly custody reserve assets. The proposed rule would impose
requirements on where and how OCC-regulated permitted payment
stablecoin issuers may hold reserve assets and would also impose
requirements on OCC-regulated institutions that hold reserve assets on
behalf of stablecoin issuers, including stablecoin issuers not
regulated by the OCC. Accordingly, there may be overlap between the
requirements imposed by different regulators with separate requirements
implementing section 10 of the GENIUS Act that govern how their
regulated entities must handle reserve assets placed by other
stablecoin issuers. The OCC invites comment on the best ways to manage
potentially overlapping requirements. The proposed rule would require
that an ``eligible financial institution'' comply with the requirements
in section 10(b), (c), and (d) of the GENIUS Act, including applicable
implementing regulations. Accordingly, even if different types of
eligible financial institutions are subject to different regulations on
the safe handling of stablecoin reserve assets, an OCC-regulated
permitted payment stablecoin issuer could still custody reserve assets
at any entity that meets the requirements in the definition of
``eligible financial institution.'' Given the diverse set of entities
that may permissibly hold stablecoin reserves, the proposed definition
of ``eligible financial institution'' would not necessarily require
that eligible financial institutions be subject to uniform regulations
implementing the requirements in section 10(b), (c), and (d) of the
GENIUS Act. The proposed rule would require a permitted payment
stablecoin issuer to enter into a custody agreement with an eligible
financial institution, which would establish a baseline that the
eligible financial institution is adhering to the requirements in
section 10(b), (c), and (d), along with any implementing regulations.
In the absence of this requirement, reserve assets might be placed at a
financial institution without the financial institution even purporting
to comply with the requirements in section 10(b), (c), or (d), or
possibly even knowing that its customer's assets represent stablecoin
reserves.
Executive officer. The OCC is proposing a definition for the term
``executive officer,'' which is used in connection with the proposed
application process in Sec. 15.30. Under the proposal, the term
``executive officer'' would mean the president, chairman, chief
executive officer, chief operating officer, chief financial officer,
chief investment officer, chief risk officer, chief technology officer,
and Bank Secrecy Act officer. The term would include any individual
serving in the functional capacity of the listed titles or their
equivalent, without regard to title, salary, or compensation. The OCC
based the proposed ``executive officer'' definition on the definition
of ``Senior executive officer'' in 12 CFR 5.51(c)(4) with certain
modifications to conform the language and format to apply to the
relevant individuals and entities under this proposed part and to
streamline the definition to the positions most likely to be relevant
for permitted payment stablecoin issuers.
Fair value. The OCC is proposing to include a definition of the
term ``fair value'' in the rule. As proposed, the term ``fair value''
would mean the fair value as determined under GAAP.\26\ Fair value is
used in proposed Sec. 15.11 in describing proposed reserve
requirements.
---------------------------------------------------------------------------

\26\ See discussion of the definition of ``GAAP,'' infra.
---------------------------------------------------------------------------

FDIC. The OCC is proposing to define FDIC to mean the Federal
Deposit Insurance Corporation. This accords with the definition of
``Corporation'' in section 2(5) of the GENIUS Act (12 U.S.C. 5901(5)).
The OCC has opted not to use the term ``Corporation'' to describe the
FDIC because that term is used more broadly in the definition of
person, discussed below.

[[Page 10207]]

Federal branch. The OCC is proposing to define the term ``Federal
branch'' as provided in the GENIUS Act, 12 U.S.C. 5901(10).
Specifically, the proposed rule provides that the term ``Federal
branch'' would have the meaning set forth in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813(s)(2)).
Federal qualified payment stablecoin issuer. The OCC is proposing
to define the term ``Federal qualified payment stablecoin issuer''
consistent with the definition of that term in the GENIUS Act, 12
U.S.C. 5901(11), with certain technical and conforming changes.
Specifically, the proposed rule would define the term ``Federal
qualified payment stablecoin issuer'' to mean the following entities
that are approved by the OCC, pursuant to proposed Sec. 15.30, to
issue payment stablecoins: (1) a nonbank entity, other than a State
qualified payment stablecoin issuer; (2) an uninsured national bank
that is chartered by the OCC, pursuant to title LXII of the Revised
Statutes; or (3) a Federal branch.\27\ The proposed definition modifies
the definition provided in the GENIUS Act by reformatting it to reduce
repetition and replacing the statutory term ``Comptroller'' with the
proposed defined term ``OCC.'' In addition, the proposed definition
replaces cross references to section 5 of the GENIUS Act (12 U.S.C.
5904) with a cross reference to the proposed implementing provisions in
proposed Sec. 15.30.
---------------------------------------------------------------------------

\27\ Certain Federal qualified payment stablecoin issuers may be
subsidiaries of national banks. For example, an uninsured national
trust bank may be a subsidiary of a national bank. An insured
national bank or Federal savings association seeking to issue a
payment stablecoin would, however, need to do so through a
subsidiary, as required under the GENIUS Act. See 12 U.S.C. 5901(23)
(defining ``permitted payment stablecoin issuer'').
---------------------------------------------------------------------------

Federal Reserve. The proposed rule would define the term ``Federal
Reserve'' to mean the Board of Governors of the Federal Reserve System.
This accords with the definition of ``Board'' in section 2(3) of the
GENIUS Act (12 U.S.C. 5901(3)). The OCC proposes to use the term
``Federal Reserve'' in place of ``Board'' for greater clarity because
the proposed rule refers separately to boards of directors in various
sections.
Foreign payment stablecoin issuer. The OCC is proposing to define
the term ``foreign payment stablecoin issuer'' consistent with the
definition of that term in the GENIUS Act, 12 U.S.C. 5901(12), with
certain clarifying changes. Under the proposed rule, the term ``foreign
payment stablecoin issuer'' would mean an issuer of a payment
stablecoin that is (1) organized under the laws of or domiciled in a
foreign country or a territory of the United States; and (2) not a
permitted payment stablecoin issuer as defined in 12 U.S.C. 5901(23).
The proposed definition of foreign payment stablecoin issuer would
refer to the statutory definition of ``permitted payment stablecoin
issuer'' because the proposed rule generally limits the definition of
that term to entities subject to the OCC's jurisdiction.
Although included in the statutory definition, the proposed
definition does not include the phrase ``Puerto Rico, Guam, American
Samoa, or the Virgin Islands.'' The OCC determined that the omitted
phrase was redundant and may lead to confusion. Under the proposed
definition, a foreign payment stablecoin issuer may be organized under
the laws of or domiciled in any territory of the United States. The
United States currently has five permanently inhabited territories: the
four listed above and the Northern Mariana Islands.
GAAP. The OCC is proposing to include a definition of the term GAAP
in the rule. The proposed rule would define the term ``GAAP'' to mean
the generally accepted accounting principles as used in the United
States. GAAP is used in the definition of fair value and proposed
subparts B and E.
Immediate family. The OCC is proposing to define the term
``immediate family'' to mean the spouse of an individual, the
individual's minor children, and any of the individual's children
(including adults) residing in the individual's home. This term is
relevant to the risk management standards concerning insider and
affiliate transactions and is consistent with the definition in
Regulation O (12 CFR part 215).
Insider. The OCC is proposing to define the term ``insider'' to
mean a principal shareholder, an executive officer, a director, or a
related interest of or the immediate family member of any of these
persons. This term is relevant to the risk management standards
concerning insider and affiliate transactions and is adapted from the
definition in Regulation O (12 CFR part 215). It has been adapted to
make direct reference to the immediate family of a principal
shareholder, executive officer, or director to mitigate the risk of an
insider engaging in inappropriate transactions to benefit immediate
family members.
Insured credit union. The OCC proposes to define the term ``insured
credit union'' consistent with the definition of the term in the GENIUS
Act, 12 U.S.C. 5901(14). As proposed, the term ``insured credit union''
would have the meaning given to that term in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
Insured depository institution. The OCC is proposing to define the
term ``insured depository institution'' consistent with the definition
of the term in the GENIUS Act, 12 U.S.C. 5901(15). As proposed, the
term ``insured depository institution'' would mean an insured
depository institution, as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) and an insured credit union.
Monetary value. The OCC is proposing to define the term ``monetary
value'' as provided in the GENIUS Act, 12 U.S.C. 5901(17). The proposal
would define ``monetary value'' to mean a national currency or deposit
(which, as discussed above, would have the same meaning as in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)) denominated in
a national currency.
Money. Section 2(18) of the GENIUS Act, 12 U.S.C. 5901(18), defines
``money'' to mean a medium of exchange currently authorized or adopted
by a domestic or foreign government, including a monetary unit of
account established by an intergovernmental organization or by
agreement between two or more countries. This definition is relevant to
the definition of national currency (discussed below) and certain
reserve assets described in section 4(a)(1)(A)(i) and (iv) of the Act
(12 U.S.C. 5903(a)(1)(A)(i) and (iv)). Section 4(a)(1)(A)(i) refers to
money standing to the credit of an account with a Federal Reserve Bank.
Section 4(a)(1)(A)(iv) refers to money received under a repurchase
agreement that meets certain requirements. Although the statutory
definition of money clearly includes monetary value, it may be unclear
at any point in time whether other mediums of exchange have been
authorized or adopted by a domestic or foreign government. Moreover,
whether a medium of exchange meets this definition may change based on
actions of foreign governments or intergovernmental organizations.
While it may be relatively clear whether an asset is money standing to
the credit of an account with a Federal Reserve Bank, there could be
ambiguity as to whether a particular asset is money received under a
repurchase agreement. Therefore, to promote clarity and uniformity for
purposes of determining whether certain assets would qualify as money
under proposed part 15, the OCC proposes that it would provide prior
confirmation publicly that a medium of

[[Page 10208]]

exchange (other than those defined as monetary value) meets the
definition of ``money'' under the GENIUS Act. Specifically, the OCC
proposes to define ``money'' for the purposes of part 15 to mean
monetary value and any other medium of exchange that the OCC has
determined is currently authorized or adopted by a domestic or foreign
government, including a monetary unit of account established by an
intergovernmental organization or by agreement between two or more
countries. The OCC expects that it would issue such public
determinations, to the extent appropriate, on its own volition or at
the request of an interested party.
National currency. The OCC is proposing to define the term
``national currency'' as provided in the GENIUS Act, 12 U.S.C.
5901(19). Under the proposed rule, the term ``national currency'' would
mean (1) a Federal Reserve note (as the term is used in the first
undesignated paragraph of section 16 of the Federal Reserve Act (12
U.S.C. 411)); (2) money standing to the credit of an account with a
Federal Reserve Bank; (3) money issued by a foreign central bank; or
(4) money issued by an intergovernmental organization pursuant to an
agreement by two or more governments.
Nonbank entity. The OCC is proposing to define the term ``nonbank
entity'' as provided in the GENIUS Act, 12 U.S.C. 5901(20).
Specifically, the term ``nonbank entity'' would mean a person that is
not a depository institution or subsidiary of a depository institution.
Consistent with the statutory definition, a nonbank entity could
include a non-subsidiary affiliate of a depository institution.
Nonpublic personal information. The OCC is proposing to define the
term ``nonpublic personal information'' to mean information (1)
provided by a customer to a permitted payment stablecoin issuer to
obtain a financial product or service, (2) about a customer resulting
from any transaction involving a financial product or service between
the permitted payment stablecoin issuer and a customer, or (3)
otherwise obtained by the permitted stablecoin issuer in connection
with providing a financial product or service to a customer. The
proposed definition does not include publicly available information,
unless such publicly available information, when combined with other
information, would reveal the identity of a customer or would enable
access to the customer's account.
OCC. The OCC is proposing to substitute the term ``OCC'' for the
term ``Comptroller'' as defined in the GENIUS Act, 12 U.S.C. 5901(4).
Under the proposed rule, the term ``OCC'' would be defined to mean the
Office of the Comptroller of the Currency. The proposed definition
would refer to the organization as opposed to the individual who
occupies the office. Using the term OCC is consistent with the agency's
terminology in other regulations for which it has rulemaking authority.
Outstanding issuance value. The OCC is proposing to define the term
``outstanding issuance value'' to mean the total consolidated par value
of all of a payment stablecoin issuer's payment stablecoins. This would
include the combined total par value of different brands of payment
stablecoin issued by the payment stablecoin issuer (e.g., under a white
label arrangement) to the extent that such an arrangement complies with
proposed 12 CFR part 15. The proposed definition includes the defined
term ``payment stablecoin'' and should be read consistent with that
definition, discussed below. For purposes of calculating the
outstanding issuance value, the OCC believes that a digital asset that
is, or is designed to be, used as a means of payment or settlement but
for which there is not yet an obligation to convert, redeem, or
repurchase for a fixed amount of monetary value should not be included
in the calculation. A digital asset minted (i.e., created on a
blockchain) by an issuer to be a payment stablecoin would not be
included in the calculation of outstanding issuance value until the
obligation to convert, redeem, or repurchase the digital asset for a
fixed amount of monetary value is incurred. Similarly, once an issuer
permanently removes a payment stablecoin from circulation (e.g., burns
the payment stablecoin) the digital asset would cease to be included in
the calculation of outstanding issuance value. Payment stablecoins for
which holder access has been restricted pursuant to applicable law,
regulation, or court order would remain payment stablecoins, as the
issuer's obligation to convert, redeem, or repurchase for a fixed
amount of monetary value continues and the associated reserves are
maintained in segregated accounts pending resolution of the
restriction. Likewise, if an issuer repurchased a payment stablecoin
but did not burn the payment stablecoin, the stablecoin in the
permitted payment stablecoin issuer's inventory would not be part of
the issuer's outstanding issuance value (but would become part of the
outstanding issuance value if the permitted payment stablecoin issuer
subsequently put the payment stablecoin back into circulation).
Therefore, the proposed definition of ``outstanding issuance value''
only includes payment stablecoins for which the permitted payment
stablecoin issuer is obligated to convert, redeem, or repurchase for a
fixed amount of monetary value (generally the issued payment
stablecoins in circulation).
The OCC also considered whether the proposed ``outstanding issuance
value'' definition should include only those payment stablecoins issued
by a permitted payment stablecoin issuer, or also the payment
stablecoins issued by the issuer's non-consolidated affiliates.\28\ The
OCC determined that it was appropriate to limit the proposed definition
to include only the payment stablecoins issued by a permitted payment
stablecoin issuer (and consolidated subsidiaries). The OCC believes
that the proposed definition would scope in the appropriate permitted
payment stablecoin issuers to the relevant provisions regarding reserve
assets,\29\ the frequency of examinations,\30\ required audits,\31\
transition to the Federal regulatory framework,\32\ and minimum capital
calculation \33\ without being overly expansive and that it best aligns
with the language in the statute. Notwithstanding the proposed
definition of ``outstanding issuance value,'' non-consolidated
affiliates of an issuer that issue payment stablecoins would separately
need to comply with the requirements of the Act.
---------------------------------------------------------------------------

\28\ As noted above, the definition of ``outstanding issuance
value'' includes the consolidated value of issued payment
stablecoins.
\29\ See proposed Sec. 15.11.
\30\ See proposed Sec. 15.14.
\31\ See id.
\32\ See proposed Sec. 15.15(b).
\33\ See proposed subpart E.
---------------------------------------------------------------------------

Payment stablecoin. The OCC is proposing to define the term
``payment stablecoin'' consistent with the definition of the term in
the GENIUS Act, 12 U.S.C. 5901(22), with certain technical changes.
Under the proposal, the term ``payment stablecoin'' would mean a
digital asset (i) that is, or is designed to be, used as a means of
payment or settlement; and (ii) the issuer of which (A) is obligated to
convert, redeem, or repurchase for a fixed amount of monetary value,
not including a digital asset denominated in a fixed amount of monetary
value; and (B) represents that such issuer will maintain, or creates
the reasonable expectation that it will maintain, a stable value
relative to the value of a fixed amount of monetary value.\34\ For

[[Page 10209]]

a digital asset to be a payment stablecoin under proposed part 15, the
issuer must be obligated to convert, redeem, or repurchase the digital
asset for a fixed amount of monetary value.
---------------------------------------------------------------------------

\34\ The OCC interprets the statutory language in 12 U.S.C.
5901(22) to mean that the permitted payment stablecoin issuer would
be obligated to meet redemption requests at par.
---------------------------------------------------------------------------

The proposed definition also provides that a ``payment stablecoin''
does not include a digital asset that is a (i) national currency; (ii)
deposit (as defined in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813)), including a deposit recorded using distributed
ledger technology; or (iii) security, as defined in section 2 of the
Securities Act of 1933 (15 U.S.C. 77b), section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c), or section 2 of the Investment
Company Act of 1940 (15 U.S.C. 80a-2). The GENIUS Act's definition of
``payment stablecoin'' also contains language clarifying that ``no
bond, note, evidence of indebtedness, or investment contract that was
issued by a permitted payment stablecoin issuer shall qualify as a
security solely [because the issuer satisfies] the conditions in
[paragraph (1) of the proposed ``payment stablecoin'' definition],
consistent with section 17 of the Act.'' The GENIUS Act provides that
this language was included ``for the avoidance of doubt.'' The OCC
determined that it was not necessary to include this language in the
proposed ``payment stablecoin'' definition because section 17 of the
GENIUS Act includes amendments to the cited Federal statutes that
clarify that payment stablecoins are not securities.
Permitted payment stablecoin issuer. The OCC is proposing to define
the term ``permitted payment stablecoin issuer'' consistent with the
definition of the term in the GENIUS Act, 12 U.S.C. 5901(23), with
certain modifications. Specifically, the proposed definition would
limit the definition to the entities that are subject to the OCC's
jurisdiction, including State qualified payment stablecoin issuers
subject to the OCC's regulatory authority under section 4 of the GENIUS
Act (12 U.S.C. 5903).\35\ In addition, the proposed definition cross-
references the relevant proposed implementing provision in place of the
statutory provision included in the GENIUS Act's definition. Under the
proposed rule, the term ``permitted payment stablecoin issuer'' would
mean a person formed in the United States that is a (1) subsidiary of
an insured national bank or Federal savings association that has been
approved to issue payment stablecoins under Sec. 15.30; (2) Federal
qualified payment stablecoin issuer; or (3) State qualified payment
stablecoin issuer subject to the OCC's regulatory or enforcement
authority under section 4 of the GENIUS Act (12 U.S.C. 5903).\36\
---------------------------------------------------------------------------

\35\ See Scope section-by-section analysis, supra.
\36\ In addition, the OCC has enforcement authority pursuant to
section 7(e)(2) of the GENIUS Act (12 U.S.C. 5906(e)(2)) with
respect to certain nonbank State qualified payment stablecoin
issuers in unusual and exigent circumstances. Proposed Sec. 15.16
would address the requirements applicable to certain State qualified
payment stablecoin issuers under unusual and exigent circumstances,
but the OCC is not proposing to include State qualified payment
stablecoin issuers that come within the OCC's jurisdiction solely as
a result of section 7(e)(2) of the GENIUS Act within the definition
of permitted payment stablecoin issuer.
---------------------------------------------------------------------------

Person. The OCC is proposing to define the term ``person'' as the
term is defined in the GENIUS Act, 12 U.S.C. 5901(24). As proposed, the
term ``person'' would mean an individual, partnership, company,
corporation, association, trust, estate, cooperative organization, or
other business entity, incorporated or unincorporated.
Principal shareholder. The OCC is proposing to define the term
``principal shareholder'' to mean a person who directly or indirectly
or acting in concert with one or more persons, or together with members
of their immediate family, will own, control, or hold 10 percent or
more of the voting stock of the permitted payment stablecoin issuer or
applicant. This definition is substantially similar to the definition
used in the OCC's general licensing regulations in 12 CFR 5.20(d)(10).
Private key. The OCC is proposing to define the term ``private
key'' to mean the unique alphanumeric string that allows an individual
to transfer a particular unit of a digital asset using a distributed
ledger. This definition is intended to include shards of a private
key.\37\
---------------------------------------------------------------------------

\37\ Sharding refers to dividing a private key into distinct
pieces for enhanced security.
---------------------------------------------------------------------------

Publicly available information. The OCC is proposing to define the
term ``publicly available information'' to mean any information that a
person has a reasonable basis to believe is lawfully made available to
the general public from: (1) Federal, State, or local government
records, (2) widely distributed media; (3) disclosures to the general
public that are required to be made by Federal, State, or local law; or
(4) a distributed ledger.\38\
---------------------------------------------------------------------------

\38\ As noted above, the term ``distributed ledger'' is limited
to publicly available and accessible ledgers.
---------------------------------------------------------------------------

Registered public accounting firm. The OCC is proposing to define
the term ``registered public accounting firm'' as provided in the
GENIUS Act, 12 U.S.C. 5901(26). Under the proposal, the term
``registered public accounting firm'' would mean a registered public
accounting firm set forth in section 2 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7201).
Related interest. The OCC is proposing to define the term ``related
interest'' of a person to mean (1) a company that is controlled by that
person; or (2) a political or campaign committee that is controlled by
that person or the funds or services of which will benefit that person.
This term is relevant to the risk management standards for insider and
affiliate transactions and is derived from the definition in Regulation
O (12 CFR part 215).
Reserve asset. The OCC is proposing to define the term ``reserve
asset'' to mean an asset maintained by a permitted payment stablecoin
issuer of a type enumerated in Sec. 15.11(b). A permitted payment
stablecoin issuer may maintain reserve assets as a custodian.
Stablecoin Certification Review Committee. The OCC is proposing to
define the term ``Stablecoin Certification Review Committee''
consistent with the definition in the GENIUS Act, 12 U.S.C. 5901(27) by
adopting the statutory definition. The proposed rule would define the
term ``Stablecoin Certification Review Committee'' as having the
meaning set forth in section 2 of the GENIUS Act (12 U.S.C. 5901(27)).
Defining this term by cross reference to the GENIUS Act would ensure
ongoing alignment between the regulatory and statutory definitions.
Further, the proposed definition would ensure that the definition in
this proposed part would not conflict with the actions of the U.S.
Department of the Treasury, Federal Reserve, and FDIC taken pursuant to
their responsibilities related to the Stablecoin Certification Review
Committee under the GENIUS Act. The OCC believes adopting the
definition provided in the GENIUS Act is appropriate in this instance
because the changes that the OCC would otherwise make to the definition
if it did not adopt the definition provided in the GENIUS Act would not
alter the substantive requirements of the proposed rule for entities
within its scope.
State. The OCC is proposing to define the term ``State'' as
provided in the GENIUS Act, 12 U.S.C. 5901(28). Under the proposed
rule, the term ``State'' would mean each of the several States of the
United States, the District of

[[Page 10210]]

Columbia and each territory of the United States.\39\
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\39\ United States territories are also referenced in the
proposed definition of ``foreign payment stablecoin issuers.'' The
GENIUS Act and this proposed part address the potential overlap
created by inclusion of territories in both definitions by defining
``foreign payment stablecoin issuers'' to exclude ``permitted
payment stablecoin issuers.'' Therefore, if a payment stablecoin
issuer is a ``permitted payment stablecoin issuer'' because it is a
``State qualified payment stablecoin issuer'' that is legally
established under the laws of a territory of the United States then
by definition it cannot be a ``foreign payment stablecoin issuer.''
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State chartered depository institution. The OCC is proposing to
define the term ``State chartered depository institution'' as provided
in the GENIUS Act, 12 U.S.C. 5901(29). Specifically, the proposed rule
would define the term ``State chartered depository institution'' as
having the meaning as set forth for ``State depository institution'' in
section 3(c) of the Federal Deposit Insurance Act (12 U.S.C.
1813(c)(5)).
State payment stablecoin regulator. The OCC is proposing to define
the term ``State payment stablecoin regulator'' as provided in the
GENIUS Act, 12 U.S.C. 5901(30). As such, the OCC is proposing to define
``State payment stablecoin regulator'' to mean a State agency that has
primary regulatory and supervisory authority in such State over
entities that issue payment stablecoins.
State qualified payment stablecoin issuer. The OCC is proposing to
define the term ``State qualified payment stablecoin issuer''
consistent with the definition of that term in the GENIUS Act, 12
U.S.C. 5901(31), with a non-substantive, clarifying change. Under the
proposed rule, the term ``State qualified payment stablecoin issuer''
would mean an entity that is (1) legally established under the laws of
a State and approved to issue payment stablecoins by a State payment
stablecoin regulator; and (2) not an uninsured national bank chartered
by the OCC pursuant to title LXII of the Revised Statutes, a Federal
branch, an insured depository institution, or a subsidiary of such an
uninsured national bank, Federal branch, or insured depository
institution. The proposed definition clarifies the definition of
``State qualified payment stablecoin issuer'' provided in the GENIUS
Act by adding the phrase ``an uninsured'' before the term ``national
bank'' in the list of excluded subsidiaries to parallel the description
of excluded entities in the preceding list.
Subsidiary. The OCC is proposing to define the term ``subsidiary''
as provided in the GENIUS Act, 12 U.S.C. 5901(32). Specifically, the
proposed rule would define the term ``subsidiary'' as having the
meaning set forth in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813(w)(4)). Because the term in section 3 of that Federal
Deposit Insurance Act relies on the definitions of ``company'' and
``control'' in section 2 of the Bank Holding Company Act, the OCC
proposes to incorporate those definitions in proposed part 15, tailored
to the extent necessary, as described above.
Trading volume. The OCC is proposing to define the term ``trading
volume'' to mean the aggregate number of payment stablecoins issued by
a permitted payment stablecoin issuer that were purchased or sold on
exchanges during a specified period of time.
United States customer. The OCC is proposing to define the term
``United States customer'' to mean a customer that resides in the
United States.
3. Severability (Proposed Sec. 15.3)
Proposed Sec. 15.3 would provide that the provisions of this
proposed part 15 are separate and severable from one another. If any
provision is stayed or determined to be invalid, it is the OCC's
intention that the remaining provisions shall continue in effect. If a
provision of the rule were found to be invalid, the OCC anticipates
that it would evaluate whether any re-proposal of the rule is
appropriate. The OCC is proposing to include the severability clause to
ensure that, in the event any particular provision of the proposed rule
is held to be invalid, the remainder of the rule would continue in
effect, providing clarity for market participants on how to comply with
the OCC's regulations implementing the GENIUS Act pending any re-
proposal.
The OCC generally intends all of its rulemakings to be severable to
the extent portions of the rule are determined to be invalid regardless
of the presence of a severability clause. The OCC is proposing to
include an explicit severability clause to this rulemaking given the
novelty and scope of the GENIUS Act and the importance of ensuring as
much certainty as possible for the regulatory framework for payment
stablecoins.

B. Subpart B--Permitted Payment Stablecoin Issuers and State Qualified
Payment Stablecoin Issuers

1. Activities (Proposed Sec. 15.10)
Section 4(a)(7)(A) of the GENIUS Act (12 U.S.C. 5903(a)(7)(A)) sets
forth the list of activities in which a permitted payment stablecoin
issuer may engage. Additionally, section 16(b) of the GENIUS Act (12
U.S.C. 5915(b)) outlines certain additional activities and investments
in which permitted payment stablecoin issuers may engage.
Consistent with the statute, the OCC is proposing to mirror the
permitted activities from section 4(a)(7)(A) of the GENIUS Act (12
U.S.C. 5903(a)(7)(A)) in proposed Sec. 15.10(a)(1) through (4), which
include: (1) issuing payment stablecoins; (2) redeeming payment
stablecoins; (3) managing reserves related to the issuance or
redemption of payment stablecoins, including purchasing, selling, and
holding reserve assets or providing custodial services for reserve
assets, consistent with applicable State and Federal law; and (4)
providing custodial or safekeeping services for payment stablecoins,
required reserves, or private keys of stablecoins consistent with the
GENIUS Act, as implemented in proposed subpart C. Additionally,
proposed Sec. 15.10(a)(8) provides that a permitted payment stablecoin
issuer may undertake any other activities that directly support any of
the activities in proposed Sec. 15.10(a)(1) through (4), which is
explicitly provided for in section 4(a)(7)(A)(v) of the GENIUS Act (12
U.S.C. 5903(a)(7)(A)(v)). One such example of an activity that would
qualify under proposed Sec. 15.10(a)(8) because it directly supports
both issuance and redemption of payment stablecoins would be the
permitted payment stablecoin issuer's holding of non-payment stablecoin
crypto-assets as principal necessary for testing a distributed ledger,
whether internally developed or acquired from a third-party.\40\ Such
an activity may be necessary to ensure that the permitted payment
stablecoin issuer may operate safely and effectively on a distributed
ledger. To the extent that permitted payment stablecoin issuers are
unclear about whether an activity qualifies as activity that directly
supports the activities in proposed Sec. 15.10(a)(1) through (a)(4),
the OCC encourages issuers to ask the OCC directly whether an activity
is permissible.
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\40\ The holding of crypto-assets as principal necessary for
testing otherwise permissible crypto-asset-related platforms is a
permissible activity for national banks. See OCC Interpretive Letter
1186 (November 18, 2025).
---------------------------------------------------------------------------

In addition to the activities outlined in section 4(a)(7) of the
GENIUS Act (12 U.S.C. 5903(a)(7)), for the sake of clarification,
proposed Sec. 15.10(a)(5) provides that permitted payment stablecoin
issuers may assess fees that are associated with the purchasing or
redeeming of payment stablecoins. This power is inherent in the
activities described above and is explicitly

[[Page 10211]]

recognized in section 4(a)(1)(B)(ii) of the Act (12 U.S.C.
5903(a)(1)(B)(ii)).
The OCC also proposes to include the permitted activities outlined
in section 16(b) of the GENIUS Act (12 U.S.C. 5915(b)), namely acting
as principal or agent with respect to any payment stablecoin and paying
fees to facilitate customer transactions.\41\ The OCC notes that the
language in section 16(b) of the Act (12 U.S.C. 5915(b)) is limited by
the clause that provides that entities regulated by the primary Federal
payment stablecoin regulators are ``authorized to engage in the payment
stablecoin activities and investments contemplated by this Act . . .''
Accordingly, ``acting as principal or agent with respect to any payment
stablecoin'' is permissible within the limited set of authorities
otherwise prescribed by the GENIUS Act rather than, for example, any
activity that may be conducted as principal or agent (i.e., any
activity involving a payment stablecoin). Therefore, proposed Sec.
15.10(a)(6) would allow permitted payment stablecoin issuers to hold
and transact in payment stablecoins as principal or agent. Payment
stablecoins are not, however, a permitted reserve asset in proposed
Sec. 15.11.\42\ To the extent a permitted payment stablecoin issuer is
a ``digital asset service provider,'' as defined in proposed Sec.
15.2, the issuer must also comply with the prohibition outlined in
section 3(b)(2) of the GENIUS Act (12 U.S.C. 5902(b)(2)), providing
that it is unlawful for any digital asset service provider to offer,
sell, or otherwise make available in the United States a payment
stablecoin issued by a foreign payment stablecoin issuer, unless
certain conditions are met.
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\41\ Section 16(b) of the Act provides in part that ``Entities
regulated by the primary Federal payment stablecoin regulators are
authorized to engage in the payment stablecoin activities and
investments contemplated by this Act, including acting as a
principal or agent with respect to any payment stablecoin and
payment of fees to facilitate customer transactions.'' 12 U.S.C.
5915(b). The activities authorized under section 16(b) include, for
example, acting as an agent for a customer with respect to the
redemption of a payment stablecoin issued by a third party.
\42\ See 12 U.S.C. 5903(a)(1) (setting forth permissible reserve
assets).
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Consistent with section 16(b) of the GENIUS Act, proposed Sec.
15.10(a)(7) would allow permitted payment stablecoin issuers to pay
fees to facilitate customer transactions (e.g., network or ``gas''
fees). If an issuer's payment stablecoin operates on a blockchain that
assesses transaction fees, then the issuer may choose to pay
transaction fees on behalf of the customer. The OCC recognizes that, if
an issuer is paying transaction fees on certain distributed ledgers,
the issuer may have to hold non-payment stablecoin crypto-assets to
facilitate the payment of these transaction fees.\43\ Consistent with
the Act, such crypto-assets are not permitted reserve assets in
proposed Sec. 15.11.
---------------------------------------------------------------------------

\43\ See OCC Interpretive Letter 1186 (November 18, 2025).
---------------------------------------------------------------------------

Proposed Sec. 15.10(b) incorporates language from section 16(a) of
the GENIUS Act (12 U.S.C. 5915(a)) and emphasizes that nothing in
proposed Sec. 15.10(a) may be construed to limit the authority of a
depository institution, national bank, or trust company to engage in
activities permissible pursuant to applicable State and Federal law.
Consistent with this provision, for example, an uninsured national bank
that is a permitted payment stablecoin issuer, may engage in fiduciary,
trust, and other related activities consistent with applicable law.
Similarly, a national bank or Federal savings association may provide
crypto-asset custody services, either in a fiduciary or non-fiduciary
capacity,\44\ or use distributed ledger technology and related
stablecoins to carry out payment activities.\45\
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\44\ See OCC Interpretive Letter 1170 (July 22, 2020). If a
national bank or Federal savings association will be offering
custody services in a fiduciary capacity, it will have to comply
with the provisions of 12 U.S.C. 92a and 12 CFR part 9 and 12 U.S.C.
1464(n) and 12 CFR part 150, as applicable.
\45\ See OCC Interpretive Letter 1174 (January 4, 2021). The
activities described in Interpretive Letter 1174 remain permissible
to the extent that they have not been superseded by the GENIUS Act.
Indeed, the Act confirms that national banks and Federal savings
associations may act as principal with respect to payment
stablecoins and use distributed ledgers to facilitate payments. See
12 U.S.C. 5915. An insured national bank or Federal savings
association seeking to issue a payment stablecoin would, however,
need to do so through a subsidiary, as required under the GENIUS
Act. See 12 U.S.C. 5901(23) (defining permitted payment stablecoin
issuer).
---------------------------------------------------------------------------

The rule of construction in section 4(a)(7)(B) of the GENIUS Act
(12 U.S.C. 5903(a)(7)(B)) provides:
Nothing in subparagraph (A) shall limit a permitted payment
stablecoin issuer from engaging in payment stablecoin activities or
digital asset service provider activities specified by this Act, and
activities incidental thereto, that are authorized by the primary
Federal payment stablecoin regulator or the State payment stablecoin
regulator, as applicable, consistent with all other Federal and State
laws[.]
By its terms, this rule of construction clarifies the scope of
subparagraph (A) rather than, for example, providing an independent
grant of authority. Moreover, the phrase ``consistent with all other
Federal and State laws'' indicates that the ``digital asset service
provider activities'' and ``activities incidental thereto'' must be
consistent with a grant of authority provided for in another Federal or
State law. Therefore, to the extent that a permitted payment stablecoin
issuer seeks to engage in ``digital asset service provider activities''
or ``activities incidental thereto,'' the activity must be
independently authorized under another source of applicable law. If a
permitted payment stablecoin issuer seeks clarity on whether ``digital
asset service provider activities'' or ``activities incidental
thereto'' are permissible under a different authorizing statute, the
OCC encourages issuers to ask the OCC directly whether such activities
are permissible.
a. Prohibited Activities
The GENIUS Act also provides for certain prohibitions for permitted
payment stablecoin issuers, including the prohibition on
rehypothecation in section 4(a)(2) (12 U.S.C. 5903(a)(2)), the
prohibition on the use of deceptive names in section 4(a)(9) (12 U.S.C.
5903(a)(9)), the prohibition against misrepresenting insured status in
section 4(e) (12 U.S.C. 5903(e)), and the prohibition on paying
interest or yield in section 4(a)(11) (12 U.S.C. 5903(a)(11)).
In proposed Sec. 15.10(c)(1), the OCC imports the prohibition on
the use of a deceptive name from section 4(a)(9) of the GENIUS Act (12
U.S.C. 5903(a)(9)). This provision prohibits a permitted payment
stablecoin issuer from using any combination of terms relating to the
United States Government, including ``United States,'' ``United States
Government,'' and ``USG,'' in the name of the payment stablecoin. This
prohibition does not apply to abbreviations relating directly to the
currency to which the payment stablecoin is pegged, such as ``USD.''
Consistent with section 4(a)(9) of the GENIUS Act (12 U.S.C.
5903(a)(9)), proposed Sec. 15.10(c)(2) would prohibit permitted
payment stablecoin issuers from marketing a payment stablecoin in such
a way that a reasonable person would perceive the payment stablecoin to
be legal tender as described in 31 U.S.C. 5103, issued by the United
States, or guaranteed or approved by the Government of the United
States. The OCC recognizes that permitted payment stablecoin issuers
may want to market themselves as permitted payment stablecoin issuers
under the GENIUS Act. There is no prohibition against issuers marketing
themselves in this

[[Page 10212]]

manner, so long as they do not run afoul of the prohibitions outlined
in proposed Sec. 15.10(c)(1) and (2), including the prohibition
against marketing a payment stablecoin in such a way that a reasonable
person would perceive the payment stablecoin to be guaranteed, issued,
or approved by the United States. The OCC notes that misrepresentations
by a permitted payment stablecoin issuer cannot be cured by a general
disclaimer and that representations and disclosures should be clear to
permitted payment stablecoin holders and customers. Consistent with
section 4(e) of the GENIUS Act (12 U.S.C. 5903(e)), proposed Sec.
15.10(c)(3) would provide that a permitted payment stablecoin issuer
may not directly or through implication represent that payment
stablecoins are backed by the full faith and credit of the United
States, guaranteed by the United States Government, or subject to
Federal deposit insurance or Federal share insurance.
Consistent with section 4(a)(11) of the GENIUS Act (12 U.S.C.
5903(a)(11)), proposed Sec. 15.10(c)(4) provides that permitted
payment stablecoin issuers must not pay the holder of any payment
stablecoin any form of interest or yield (whether in cash, tokens, or
other consideration) solely in connection with the holding, use, or
retention of such payment stablecoin. The OCC understands that issuers
could attempt to make prohibited payments of interest or yield to
payment stablecoins holders through arrangements with third parties.
Moreover, there likely will be a large and changing variety of
arrangements with third parties in which issuers could achieve the
payment of yield to payment stablecoin holders. It would not be
possible to identify in detail all, or even most, of the potential
arrangements between permitted payment stablecoin issuers and third
parties that the OCC may prohibit under section 4(a)(11) of the GENIUS
Act and the OCC's rulemaking authority under section 4(h) of the GENIUS
Act,\46\ particularly as such arrangements may evolve over time. On the
other hand, a rule with only a general prohibition on the payment of
yield could create uncertainty within the payment stablecoin market.
---------------------------------------------------------------------------

\46\ Section 4(h) of the GENIUS Act provides that the OCC and
other stablecoin regulators may issue regulations to ``carry out the
requirements of this section, including to establish conditions, and
to prevent evasion thereof.'' 12 U.S.C. 5903(h) (emphasis added).
---------------------------------------------------------------------------

To balance these interests, the OCC is proposing to include a
presumption in paragraph (c)(4)(i) that certain types of arrangements
with certain types of persons would be prohibited payments of yield or
interest by the issuer. Specifically, the OCC would presume that a
permitted payment stablecoin issuer is paying the holder of any payment
stablecoin any form of interest or yield (whether in cash, tokens, or
other consideration) solely in connection with the holding, use, or
retention of such payment stablecoin if: (A) the permitted payment
stablecoin issuer has a contract, agreement, or other arrangement with
an affiliate or a related third party to pay interest or yield to the
affiliate or related third party; and (B) the affiliate \47\ or related
third party (or affiliate of such related third party) has a contract,
agreement, or other arrangement to pay interest or yield (whether in
cash, tokens, or other consideration) to a holder of any payment
stablecoin issued by the permitted stablecoin issuer solely in
connection with the holding, use, or retention of such payment
stablecoin. To the extent that the person, or an affiliate of the
person with whom the permitted payment stablecoin issuer has a
contract, agreement, or other arrangement to pay interest or yield is a
related third party of the permitted payment stablecoin issuer because
the permitted payment stablecoin issuer issues payment stablecoins on
the related third party's behalf or under the related third party's
branding, the arrangement between the related third party and the
holder of the payment stablecoin would consider the holder of the
payment stablecoin to be the holder of the payment stablecoin issued by
the permitted payment stablecoin issuer on the related third party's
behalf or under the related third party's branding. That is to say,
with respect to a white-label relationship, the presumption would be
triggered only to the extent the payment stablecoin holder is a holder
of the related third party's white-labeled stablecoin (as opposed to
other payment stablecoins issued by the permitted payment stablecoin
issuer).
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\47\ A person would not be included within this second prong
solely because the person is an affiliate of an affiliate of the
issuer.
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Related third parties would be defined to include any person paying
interest or yield to payment stablecoin holders as a service (i.e., on
behalf of the permitted payment stablecoin issuer) and any person that
the issuer issues payment stablecoins on behalf or under the branding
of (i.e., persons that have entered white-label relationship with the
issuer). The OCC believes that the close nexus to the issuer's payments
and payments to the payment stablecoin holder as well as the close
contractual or control relationship between the issuer and the other
party would make it highly likely that the issuer's payments of yield
or interest would be made to the holder through an intermediary or an
attempt the evade the GENIUS Act's prohibition on interest and yield
payments. Nonetheless, the OCC would permit the issuer to rebut the
presumption given the issuer provides sufficient evidence to the
contrary. Specifically, a permitted payment stablecoin issuer may rebut
the presumption by submitting written materials that, in the OCC's
judgment, demonstrate that the contract, agreement, or other
arrangement is not prohibited under paragraph (c)(4) and is not an
attempt to evade the prohibition.
Other arrangements that are not captured by the presumption may
also violate the statutory prohibition or constitute an evasion
thereof. The OCC would assess those arrangements on a case-by-case
basis but does not believe that it is necessary to include other
arrangements within the rebuttable presumption at this time. The
prohibition is not intended to prevent a merchant from independently
offering a discount to a payment stablecoin holder for using payment
stablecoins. The prohibition is also not intended to prevent a
permitted payment stablecoin issuer from sharing in the profits derived
from the payment stablecoin with a non-affiliate partner in a white-
label arrangement.
In proposed Sec. 15.10(c)(5), the OCC proposes to include the
language from 12 U.S.C. 5903(a)(2) that prohibits permitted payment
stablecoin issuers from pledging, rehypothecating, or reusing any
reserve assets required under 12 U.S.C. 5903(a)(1), except for the
purposes listed in section 4(a)(2) of the GENIUS Act (12 U.S.C.
5903(a)(2)). Thus, consistent with the statute, a permitted payment
stablecoin issuer may not pledge, rehypothecate, or re-use any reserve
assets, either directly or indirectly (e.g., through a third-party
custodian of the reserve assets), except for the purpose of: (i)
satisfying margin obligations in connection with investments in
permitted reserves under proposed Sec. 15.11(b)(4) or (5); (ii)
satisfying obligations associated with the use, receipt, or provision
of standard custodial services; \48\ or (iii) creating liquidity to
meet reasonable expectations of requests to redeem payment stablecoins,
such that reserves in the form of Treasury bills with a

[[Page 10213]]

maturity of 93 days or less may be sold as purchased securities in
repurchase agreements,\49\ provided that either: (A) the repurchase
agreements are cleared by a clearing agency registered with the
Securities and Exchange Commission; or (B) the permitted payment
stablecoin issuer receives prior approval from the OCC. By including
the phrase ``directly or indirectly'' in the prohibition, it is clear
that Congress intended that a custodian that holds the reserves on
behalf of a permitted payment stablecoin issuer also may not pledge,
rehypothecate or reuse any of the reserve assets, other than with
respect to the limited exceptions discussed in proposed Sec.
15.10(c)(5). To the extent that a custodian holding the payment
stablecoin reserves were allowed to bypass this prohibition, it would
undermine the relatively safe nature of the reserve assets and the
confidence that payment stablecoin holders have that the payment
stablecoin will hold its peg.
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\48\ The OCC interprets this exception, codified in 12 U.S.C.
5903(a)(2)(B), as being related solely to the purposes specified in
12 U.S.C. 5909(c)(2)(B).
\49\ Section 4(a)(2)(C) of the Act (12 U.S.C. 5903(a)(2)(C))
states that reserves in the form of Treasury bills may be sold as
purchased securities for repurchase agreements with a maturity of 93
days or less if certain conditions are met. The OCC proposes to
clarify, consistent with section 4(a)(1)(iv) of the Act (12 U.S.C.
5903(a)(1)(iv)), that the Treasury bills sold under the repurchase
agreement must have a maturity of 93 days or less. Consistent with
this clarification and the OCC's proposed approval of repurchase
agreements under section 4(a)(2)(C) of the Act, discussed below, the
maturity of the repurchase agreement would be overnight.
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The OCC will deem any repurchase agreement approved under this
section and section 4(a)(2)(C) of the Act, provided that the Treasury
bills sold as purchased securities have a maturity of 93 days or less,
consistent with the requirement that Treasury bills held as reserve
assets must have a maturity of 93 days or less, and the liquidity
obtained through repurchase borrowings is not being obtained solely for
purposes other than meeting redemption requests or compliance with the
requirements of this proposed rule. The OCC believes that providing
this prior approval by rule will enhance the ability of permitted
payment stablecoin issuers to obtain liquidity quickly (through
outright sales or repurchase agreements) and thereby facilitate the
timely redemption of payment stablecoins. It is clear from section
4(a)(1)(A) of the Act (12 U.S.C. 5903(a)(1)(A)) that permitted payment
stablecoin issuers may maintain identifiable reserves comprising of
money received under certain repurchase agreements. It would frustrate
section 4(a)(1)(A)(iv)'s clear permission to maintain such reserve
assets if permitted payment stablecoin issuers could only engage in
repurchase borrowing transactions upon the completion of cumbersome
procedures and one-off supervisory approvals. The ability to obtain
immediate liquidity through repurchase borrowings is useful and
supplements a permitted payment stablecoin issuer's ability to access
immediate liquidity via other means (for example, the maintenance of
bank deposits or actual sales of securities). The prohibition on
rehypothecation in proposed Sec. 15.10(c)(5) would, consistent with
section 4(a)(2)(C) of the Act, prohibit rehypothecation except for the
purpose of creating liquidity to meet reasonable expectations of
requests for redemption. However, given the fungibility of money, the
OCC will not scrutinize the exact uses to which repurchase borrowing
proceeds are put. The limited circumstances in which the OCC would not
consider rehypothecation permissible would be if repurchase borrowings
are obtained solely for some purpose other than obtaining liquidity to
meet redemption requests or compliance with the rule--for example, if
repurchase proceeds are to be used solely for paying dividends to a
permitted payment stablecoin issuer (i.e., removing excess reserve
assets above the required minimum).
Section 4(h)(1) of the GENIUS Act (12 U.S.C. 5903(h)(1)) provides
that the OCC may issue regulations to ``carry out the requirements of
this section . . . and to prevent evasion thereof.'' In proposed Sec.
15.10(c)(6), consistent with this statutory authority, the OCC proposes
language that provides that a permitted payment stablecoin issuer must
not engage in any activity that the OCC determines is an evasion of the
requirements of section 4 of the GENIUS Act (12 U.S.C. 5903) or Part
15.
The OCC has considered and is requesting comment on whether to
prohibit a permitted payment stablecoin issuer from issuing more than
one brand of payment stablecoin (i.e., more than one set of payment
stablecoins marketed under the same name). The OCC recognizes that
there are advantages and disadvantages associated with permitting a
payment stablecoin issuer to issue multiple brands of stablecoin that
may be co-branded with a named partner in a white label arrangement.
These arrangements can allow parties to leverage the experience and
expertise of a permitted payment stablecoin issuer and facilitate a
broader range of stablecoins in the market. However, they may also
foster uncertainty about reserve assets and encourage contagion and run
risk among brands of payment stablecoins, including but not limited to
brands issued by one issuer. One possibility that the OCC has
considered and is requesting comment on is to restrict each permitted
payment stablecoin issuer to issuing only one brand of payment
stablecoin but to streamline the process for approving applications to
become a permitted payment stablecoin issuer if an affiliate has
already been approved. Under this approach, multiple permitted payment
stablecoin issuers could share certain services and back-office
functions with each other and might operate under a common risk
management framework, but each issuer would be legally separate. This
approach would allow an entity to leverage its experience and expertise
but may provide more certainty with respect to the rights of payment
stablecoin holders in the event that a permitted payment stablecoin
issuer becomes insolvent.
The OCC has also considered and is requesting comment on whether to
prohibit a permitted payment stablecoin issuer from engaging in unsafe
or unsound practices. Pursuant to section 6(a)(3) of the GENIUS Act (12
U.S.C. 5905(a)(3)), the OCC has the ability to examine permitted
payment stablecoin issuers for risks that may pose a threat to safety
and soundness. Section 4(b)(1) of the Act (12 U.S.C. 5903(b)(1)) also
provides the OCC the ability to issue regulations to ensure financial
stability. It follows from these provisions that permitted payment
stablecoin issuers should not be allowed to engage in practices that
are unsafe or unsound. Explicitly prohibiting such activities may help
the OCC to address practices that could undermine public confidence in
permitted payment stablecoin issuers and the financial system more
generally.
2. Reserve Assets (Proposed Sec. 15.11)
Proposed Sec. 15.11 contains requirements applicable to reserve
assets. Section 4(a)(1)(A) of the Act (12 U.S.C. 5903(a)(1)(A))
provides that a permitted payment stablecoin issuer must maintain
identifiable reserves backing the outstanding payment stablecoins of
the permitted payment stablecoin issuer on an at least one-to-one basis
and specifies the eight permissible reserve asset types. The one-to-one
backing requirement applies at the permitted payment stablecoin issuer-
level. An issuer would not comply with this requirement if it did not
maintain reserve assets sufficient to meet the one-to-one backing
requirement. A permitted payment stablecoin issuer may maintain reserve
assets through a custodian, including an affiliate acting as a
custodian, as long as the custodian qualifies as an eligible financial
institution.

[[Page 10214]]

Proposed Sec. 15.11(a)(1) would require that permitted payment
stablecoin issuers maintain reserve assets that: (i) are identifiable;
(ii) are segregated from and not commingled with other assets owned or
held by the permitted payment stablecoin issuer; (iii) at all times
have a total fair value that equals or exceeds the outstanding issuance
value of the permitted payment stablecoin issuer; and (iv) are either
held directly by the permitted payment stablecoin issuer or within the
custody of an eligible financial institution. In order to maintain
reserve assets that are ``identifiable'' and comply with proposed Sec.
15.11(a)(1)(i), permitted payment stablecoin issuers must maintain
appropriate records to ensure documented ownership and legal
entitlement to individual reserve assets. Similarly, any ownership
arrangements, including ownership via custodians, must comply with
applicable laws and regulations, for example, requirements applicable
to customer securities owned through the Fedwire Securities Service.
The OCC generally anticipates that reserve assets will be recorded on
the permitted payment stablecoin issuer's balance sheet under GAAP and
be included in the quarterly reports required under proposed Sec.
15.14(i) and on Call Report Schedule RC, Balance Sheet, for a parent
insured national bank or Federal savings association. An issuer must
maintain the appropriate operational capabilities, internal controls,
policies, and safeguards to ensure that stablecoins are always backed
by reserves on an at least 1 to 1 basis. Among other things, safeguards
may include mechanisms to prevent the issuance of abnormally large
amounts of new stablecoins without additional approvals.\50\
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\50\ C.f., Dylan Butts, ``PayPal's crypto partner mints a
whopping $300 trillion worth of stablecoins in `technical error,' ''
CNBC (October 16, 2025), <a href="https://www.cnbc.com/2025/10/16/paypals-crypto-partner-mints-300-trillion-stablecoins-in-technical-error.html">https://www.cnbc.com/2025/10/16/paypals-crypto-partner-mints-300-trillion-stablecoins-in-technical-error.html</a> (describing a technical error leading to the minting of a
large amount of new stablecoins).
---------------------------------------------------------------------------

To comply with the requirement in proposed Sec. 15.11(a)(1)(iii),
a permitted payment stablecoin issuer must ensure that the fair value
of reserve assets equal or exceed the outstanding issuance value of the
outstanding payment stablecoins issued by the permitted payment
stablecoin issuer at all times. Valuing reserve assets at fair value
(i.e., market value), rather than another measure, such as amortized
cost, will help ensure that the reserve assets maintained by the
permitted payment stablecoin issuer reflect current prices and will be
monetizable at a value sufficient to meet any redemption requests at
par value. Notably, the outstanding issuance value is based on the
total consolidated par value of all of a permitted payment stablecoin
issuer's payment stablecoins rather than on the fair value of the
outstanding issued payment stablecoin. Thus, if the fair value of the
payment stablecoin decreased (i.e., if the payment stablecoin de-pegged
in the secondary market), the permitted payment stablecoin issuer would
nevertheless be obligated to retain a stock of reserve assets, the fair
value of which equals or exceeds the par value of outstanding payment
stablecoins. This approach is intended to ensure that the permitted
payment stablecoin issuer is able to credibly meet redemption requests,
including in adverse circumstances. To take a contrary approach (e.g.,
basing the outstanding issuance value on the fair value of payment
stablecoins) could allow permitted payment stablecoin issuers to
inappropriately remove assets from the required stock of reserve assets
when stablecoins de-peg (as reserve asset requirements decline, along
the with the secondary market price of the stablecoin), rather than
maintaining the reserve assets on behalf of stablecoin holders, which
may in turn exacerbate run risk for a permitted payment stablecoin
issuer.
Proposed Sec. 15.11(a)(1)(iv) provides that the reserve assets
must either be held directly by the permitted payment stablecoin issuer
or within the custody of an eligible financial institution, which is
defined in proposed Sec. 15.2.
Proposed Sec. 15.11(a)(2) would require that a permitted payment
stablecoin issuer demonstrate the operational capability to access and
monetize the identifiable reserve assets, commensurate with the
permitted payment stablecoin issuer's risk profile and business model.
The issuer must be able to monetize the reserve assets, potentially
quickly and at short notice, in order to meet redemption requests. The
inability to quickly monetize reserve assets would undermine the
ability of a permitted payment stablecoin issuer to maintain the stable
value of its payment stablecoin.
To comply with proposed Sec. 15.11(a)(2), a permitted payment
stablecoin issuer must be able to demonstrate the ability to monetize
all types of reserve assets it maintains. Depending on a permitted
payment stablecoin issuer's size, risk profile, business model,
activities, and operations, a permitted payment stablecoin issuer may
be able to demonstrate monetization in different ways. For example, it
may be sufficient for some permitted payment stablecoin issuers to
demonstrate the ability to monetize Treasury bills they hold as reserve
assets by establishing that they maintain appropriate repurchase
arrangements through which they can quickly sell Treasury bills and
receive liquid funds with which they can satisfy redemption requests.
For other permitted payment stablecoin issuers, for example, larger
permitted payment stablecoin issuers or permitted payment stablecoin
issuers with more complicated operations, additional measures may be
appropriate to demonstrate the operational capability to monetize. It
may be appropriate for such permitted payment stablecoin issuers to
maintain multiple alternative methods of monetization (for example,
multiple repurchase agreement lines or repurchase agreement lines plus
arrangements allowing outright sales of Treasury securities) in order
to satisfactorily demonstrate the ability to monetize their reserve
assets. Such redundant arrangements may be necessary if a permitted
payment stablecoin issuer maintains a sufficiently large Treasury
position that it could be difficult to monetize the entire position
through transactions with a single repo counterparty or if a permitted
payment stablecoin issuer maintains concentrated positions in
particular types of reserve assets. The availability of multiple
monetization channels helps ensure that a permitted payment stablecoin
issuer is not required to monetize assets at reduced or ``fire sale''
prices. Having alternative monetization channels reduces the risk that
a permitted payment stablecoin issuer would be obliged to accept
unfavorable pricing when monetizing reserve assets under stress. For
certain permitted payment stablecoin issuers, it may be necessary to
periodically conduct actual monetization transactions (that is, actual
outright sales or repurchase transactions) in order to demonstrate the
ability to monetize. Actual transactions can more fully confirm that
monetization capabilities exist. In the absence of actual test
transactions, potential barriers to monetization may still exist.
Permitted payment stablecoin issuers may lack the procedures and
systems to monetize assets at any time in accordance with standard
settlement periods and processes. For example, borrowing agreements may
name authorizing officials that are unavailable or inappropriate.
Actual monetization transactions may be necessary, for example, for
permitted payment stablecoin issuers with unusually complicated
operations or

[[Page 10215]]

organizational structures, or for permitted payment stablecoin issuers
that are particularly dependent on certain monetization channels or the
ability to monetize particular assets. Periodic actual monetization
transactions can minimize the risk of negative signaling during
financial stress. If a permitted payment stablecoin issuer begins using
a monetization channel that it has not regularly used in the past, that
may spark concerns about the financial health of the issuer. For
example, if a permitted payment stablecoin issuer has pre-established a
repurchase agreement with a bilateral counterparty but never utilized
it, sudden utilization of the repurchase agreement may generate
concerns that the issuer is experiencing a run on its stablecoins.
Periodic test transactions using multiple monetization channels can
mitigate such concerns and may be particularly important for large,
systemically important issuers where concerns about financial distress
are more likely to contribute to contagion. Permitted payment
stablecoin issuers may be able to demonstrate the ability to execute
actual monetization transactions in the ordinary course of their
business (for example, redeeming stablecoins) and would not necessarily
be required to engage in additional test transactions.
Proposed Sec. 15.11(a)(3) would include requirements for when
permitted payment stablecoin issuers could withdraw reserve assets in
excess of outstanding issuance value. In order to ensure that at all
sufficient reserve assets are maintained to back outstanding stablecoin
issuance, permitted payment stablecoin issuers would be able to
withdraw excess reserve assets only after the monthly examination and
certification required by section 4(a)(3) of the GENIUS Act (12 U.S.C.
5903(a)(3)) and provided for in proposed Sec. 15.11(e) and (f).
Specifically, permitted payment stablecoin issuers would be able to
withdraw any surplus reserve assets in excess of outstanding issuance
value, calculated and reported as of the last day of the previous
month, only upon the publication of that month's public disclosure, due
at the end of the subsequent month. Only permitting an issuer to
withdraw surplus reserve assets after examination and certification
will promote public confidence about the integrity of the handling of
reserve assets. Permitting withdrawal of excess reserve assets at other
intervals would significantly undermine the purpose of examination and
certification. If permitted payment stablecoin issuers were able to
withdraw excess reserve assets at any time, based only upon their own
internal calculations, that could undermine confidence and even create
concerns about misconduct, for example if a permitted payment
stablecoin issuer might make its own bad faith and un-validated
determination that an excess existed in order to justify a withdrawal.
Proposed Sec. 15.11(a)(3) would also require that, while withdrawals
would be based on calculations as of the end of the previous month, a
permitted payment stablecoin issuer could only make withdrawals if the
remaining reserve assets remained at least equal to the current
outstanding issuance value, calculated as of the day of withdrawal.
Under proposed Sec. 15.11(b), reserve assets must only comprise:
(1) United States coins and currency (including Federal Reserve notes)
or money standing to the credit of an account with a Federal Reserve
Bank; (2) funds held as deposits or insured shares payable upon demand
at an insured depository institution (including any foreign branches or
agents, including correspondent banks, of an insured depository
institution), subject to any limitation established by the FDIC and the
National Credit Union Administration, as applicable, pursuant to
section 4(a)(1)(A)(ii) of the GENIUS Act (12 U.S.C. 5903(a)(1)(A)(ii))
to address safety and soundness risks of such insured depository
institution; (3) Treasury bills, Treasury notes, or Treasury bonds with
a remaining maturity of 93 days or less; \51\ (4) money received under
repurchase agreements, with the permitted payment stablecoin issuer
acting as a seller of securities and with a no longer than overnight
maturity, that are backed by Treasury bills with a maturity of 93 days
or less; \52\ (5) reverse repurchase agreements, with the permitted
payment stablecoin issuer acting as a purchaser of securities and with
a no longer than overnight maturity, that are collateralized by
Treasury bills, Treasury notes, or Treasury bonds on a no longer than
overnight basis, subject to overcollateralization in line with standard
market terms, that are: (i) tri-party; (ii) centrally cleared through a
clearing agency registered with the Securities and Exchange Commission;
or (iii) bilateral with a counterparty that the issuer has determined
to be adequately creditworthy even in the event of severe market
stress; (6) securities issued by an investment company registered under
section 8(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
8(a)), or other registered Government money market fund, and that are
invested solely in underlying assets described in proposed Sec.
15.11(b)(1) through (5); \53\ (7) any other similarly liquid Federal
Government-issued asset approved by the OCC, in consultation with the
State payment stablecoin regulator, if applicable, of the permitted
payment stablecoin issuer; or (8) any reserve described in proposed
Sec. 15.11(b)(1) through (3), (6), or (7), in tokenized form, provided
that such reserves comply with all applicable laws and regulations. The
OCC encourages any permitted payment stablecoin issuer that seeks
clarity on whether a specific tokenized asset qualifies as a
permissible reserve asset under proposed Sec. 15.11(b)(8) to seek an
opinion from the OCC as to whether the asset qualifies. To the extent
feasible, the OCC is considering publishing a list of, or otherwise
making public, the acceptable tokenized reserve assets for the sake of
transparency. In determining whether a potential reserve asset
qualifies as ``any other similarly liquid Federal Government-issued
asset,'' under proposed Sec. 15.11(b)(7) the OCC will consider, among
other relevant factors, whether: (i) the asset has liquidity
characteristics, including during times of stress, comparable to the
other reserve assets allowed under proposed Sec. 15.11(b); (ii)
permitted payment stablecoin issuers will be operationally capable of
monetizing the asset to meet redemption requests, including sudden and
high-volume requests; (iii) the asset poses levels of risk comparable
to the assets allowed under proposed Sec. 15.11(b), including interest
rate risk and counterparty credit risk; and (iv) whether the asset
introduces additional risks that may be

[[Page 10216]]

difficult for permitted payment stablecoin issuers to manage.
---------------------------------------------------------------------------

\51\ The GENIUS Act permits the inclusion of Treasury bills,
notes, or bonds ``(I) with a remaining maturity of 93 days or less;
or (II) issued with a maturity of 93 days or less.'' The proposed
rule would combine these categories since the former category
includes the latter, at least for purposes of complying with the
requirements of proposed Sec. 15.11. Permitted payment stablecoin
issuers may choose to categorize these assets separately for other
reasons, for example accounting or risk management purposes.
\52\ The proposed rule would clarify that a repurchase agreement
or reverse repurchase agreement with an intraday maturity could
qualify as a permitted reserve asset. Section 4(a)(1)(A)(iv) and (v)
of the Act (12 U.S.C. 5903(a)(1)(A(iv) and (v))) specifically refers
to repurchase agreements and reverse repurchase agreements with an
overnight maturity. The OCC believes that this provision is intended
to permit repurchase agreements and reverse repurchase agreements
with a maturity no longer than overnight. Thus, the proposed rule
would explicitly permit the use of intraday repurchase agreements
and reverse repurchase agreements.
\53\ A money market fund that invests in any other assets,
including in Treasury securities with a remaining maturity longer
than 93 days, would not be eligible to be held as a reserve asset.
---------------------------------------------------------------------------

Section 4(a)(4)(A)(iii) of the Act (12 U.S.C. 5903(a)(4)(A)(iii))
requires the OCC to issue regulations implementing reserve asset
diversification, including deposit concentration at banking
institutions and interest rate risk management standards that (1) are
tailored to the business model and risk profile of permitted payment
stablecoin issuers and (2) do not exceed standards that are sufficient
to ensure the ongoing operations of permitted payment stablecoin
issuers. Accordingly, the proposed rule includes two alternative
options in proposed Sec. 15.11(c), only one of which would be selected
in the final rule. ``Option A'' would include a principles-based
general requirement with an optional safe harbor containing
quantitative requirements. ``Option B'' would make the quantitative
requirements mandatory for all issuers. Option A's principle-based
general requirement would require a permitted payment stablecoin issuer
to maintain reserve assets that are sufficiently diverse to manage
potential credit, liquidity, interest rate, and price risks. In
addition, the principles-based requirement in Option A in proposed
Sec. 15.11(c) would require a permitted payment stablecoin issuer to
measure and manage the risk that concentrating reserve assets at one
eligible financial institution or a small number of eligible financial
institutions may impair the ability of a permitted payment stablecoin
issuer to satisfy redemption demands if individual eligible financial
institutions are unable to return, or if there is a delay in returning,
reserve assets placed by a permitted payment stablecoin issuer.\54\ The
proposed rule's diversification and concentration requirements would
apply to custodial relationships, including sub-custodial arrangements.
Permitted payment stablecoin issuers would be expected to ``look
through'' any sub-custodial relationships to ensure that reserve assets
are custodied at the sufficiently diverse number of eligible financial
institutions needed to comply with the proposed rule's requirements.
Without this requirement, a permitted payment stablecoin issuer might
supposedly have its stock of Treasury securities custodied at multiple
eligible financial institutions, but sub-custodial relationships could
result in the entire stock being custodied at only a single eligible
financial institution.
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\54\ Eligible financial institutions that hold reserve assets in
custody or safekeeping must be subject to supervision and comply
with the requirements set forth in section 10 of the GENIUS Act (12
U.S.C. 5909). Institutions subject to OCC supervision would need to
comply with the requirements set forth in proposed subpart C of part
15.
---------------------------------------------------------------------------

Permitted payment stablecoin issuers with less complex business
models and lower risk profiles may be able to maintain a less diverse
stock of reserve assets than permitted payment stablecoin issuers with
more complex business models or higher risk profiles. However, the OCC
interprets section 4(a)(4)(A)(iii) of the GENIUS Act (12 U.S.C.
5903(a)(4)(A)(iii)) as mandating some reserve asset diversification for
all permitted payment stablecoin issuers, both in types of reserve
assets maintained and in the number of eligible financial institutions
holding a permitted payment stablecoin issuer's reserve assets.\55\ The
OCC expects that it would be unlikely, for example, that a permitted
payment stablecoin issuer, even one with a simple business model and
low risk profile, could satisfy the requirements in proposed Sec.
15.11(c) by placing all its reserve assets at a single eligible
financial institution. Such a reliance on a single third-party location
of reserve assets could expose the permitted payment stablecoin issuer
to the unnecessary risk that its reserve assets, or some portion of
them, could be unavailable to meet redemption requests. Similarly, the
OCC expects that all permitted payment stablecoin issuers will need to
maintain multiple reserve asset types, if only to serve as a back-up to
what is otherwise a permitted payment stablecoin issuer's primary
reserve asset. Some permitted payment stablecoin issuers may need to
maintain more robustly diverse stocks of reserve assets to satisfy
proposed Sec. 15.11(c), depending on their business model, risk
profile, and other relevant factors. For example, a large permitted
payment stablecoin issuer with complex operations may need to maintain
deposits with multiple eligible financial institutions, as well as a
stock of Treasury bills, potentially custodied with more than one
eligible financial institution in order to ensure they are capable of
being monetized during periods of financial stress. Factors such as the
number of parties that redeem directly with the permitted payment
stablecoin issuer, the volume of redemptions (and volatility with
respect to such volume), and the number and nature of the blockchains
on which a payment stablecoin is traded could all increase the
complexity of the permitted payment stablecoin issuer's operations and
weigh in favor of maintaining multiple different pools of reserve
assets. Permitted payment stablecoin issuers may be able to comply with
this requirement by maintaining multiple deposit accounts directly, or
through deposit placement services, as they can comply with the
requirement in proposed Sec. 15.11(a)(2) to demonstrate the
operational capability to access and monetize the reserve assets.
---------------------------------------------------------------------------

\55\ A permitted payment stablecoin issuer that maintains
ownership and control of all of its own reserve assets, rather than
relying on separate eligible financial institutions, may be able to
satisfy the principles-based general diversification and
concentration requirement in Option A, depending on the permitted
payment stablecoin issuer's particular circumstances. While
explicitly requiring all permitted payment stablecoin issuers to
maintain some reserve assets at a third-party eligible financial
institution may help promote confidence that a permitted payment
stablecoin issuer's reserve assets are diversified across multiple
eligible financial institutions, such a requirement may be
unnecessary if the permitted stablecoin issuer is able to establish
its own secure control over the reserve assets. Any permitted
payment stablecoin issuer maintaining direct ownership and control
of reserve assets would still be subject to all requirements in
proposed Sec. 15.11, notably the requirement in proposed Sec.
15.11(a)(2) under which the permitted payment stablecoin issuer must
demonstrate the operational capability to access and monetize
reserve assets. A permitted payment stablecoin issuer that maintains
ownership and control of its own assets may fail to satisfy this
requirement, or the diversification and concentration requirements
in proposed Sec. 15.11(c), if the permitted payment stablecoin
issuer, for example, relies exclusively on arrangements with a
single eligible financial institution to monetize its reserve
assets.
---------------------------------------------------------------------------

Option A contains a safe harbor under which a permitted payment
stablecoin issuer would be deemed to satisfy proposed Sec. 15.11(c) if
the permitted payment stablecoin issuer maintains on each business day:
(i) at least 10 percent of its required reserve assets as deposits or
insured shares payable upon demand or money standing to the credit of
an account with a Federal Reserve Bank; (ii) at least 30 percent of its
reserve assets as deposits or insured shares payable upon demand, money
standing to the credit of an account with a Federal Reserve Bank, or
amounts receivable and due unconditionally within five business days on
pending sales of reserve assets, maturing reserve assets, or other
maturing transactions (e.g., reverse repurchase agreements); (iii) no
more than 40 percent of its reserve assets at any one eligible
financial institution, whether as deposits or insured shares at any one
insured depository institution, securities custodied at any one
eligible financial institution, bilateral reverse repurchase agreements
with any counterparty, or through other exposures; (iv) no more than 50
percent of the amount provided in proposed Sec. 15.11(c)(2)(i) at any
one eligible financial institution; and (v) reserve assets with a
weighted average maturity

[[Page 10217]]

of no more than 20 days.\56\ This safe harbor would give permitted
payment stablecoin issuers a transparent and standardized target for
achieving compliance with reserve asset diversification
requirements.\57\ However, under Option A, meeting the safe harbor is
not the only means to comply with proposed Sec. 15.11(c). Some
issuers, particularly smaller and less complex issuers, may be able to
comply with Sec. 15.11(c) without meeting the minimum levels in the
safe harbor. For example, if a smaller permitted payment stablecoin
issuer with a comparatively simple business model and lower risk
profile finds it commercially useful to maintain more of its reserve
assets as demand deposits, the permitted payment stablecoin issuer may
be able to satisfy proposed Sec. 15.11(c) even if the permitted
payment stablecoin issuer maintains more than 10 percent of its reserve
assets as deposits at one eligible financial institution, depending on
particular facts and circumstances. This flexibility is consistent with
the GENIUS Act's requirements that the proposed asset diversification
requirements be ``tailored to the business model and risk profile of
permitted payment stablecoin issuers.'' \58\
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\56\ Weighted average maturity is computed as the sum of the
product of each reserve asset's (1) remaining maturity and (2)
percentage of the total pool of reserve assets (based on principal
value). A deposit or insured share payable upon demand would have a
weighted average maturity of zero. The OCC invites comments on
whether the proposed rule should include an express definition of
weighted average maturity, particularly whether the OCC should adopt
the same definition used in SEC Rule 2a-7 (17 CFR 270.2a-7).
Paragraph (i) of SEC Rule 2a-7 provides that, for certain securities
and transactions, maturity should not necessarily be the time
remaining until ultimate repayment of principal but instead should
be based on other characteristics (for example, the time until an
interest rate reset or until demand repayment options can be
exercised). The OCC invites comment on whether this proposed rule
should include these same maturity assumptions for certain reserve
assets. The proposed rule does not include these maturity
assumptions since they should not be relevant for most or all
permissible reserve assets. Even if the maturity assumptions are
relevant for certain reserve assets that might be permissible (for
example, Floating Rate Treasury Notes), the OCC expects that the
limited maturity of reserve assets (93 days or less) will diminish
the value of applying maturity assumptions. Accordingly, under the
proposed rule, the OCC expects that the maturity of all reserve
assets, for purposes of calculating weighted average maturity, will
be the time remaining until the repayment of principal.
\57\ The OCC recognizes that, as a permitted payment stablecoin
issuer sells more liquid assets to meet redemption requests in times
of stress, it may temporarily fail to satisfy the terms of the
proposed safe harbor. A permitted payment stablecoin issuer should
appropriately diversify its reserve assets as soon as practicable
following such an event. However, at no point, can a permitted
payment stablecoin issuer's reserve assets be less than the fair
value of the outstanding issuance value of the permitted payment
stablecoin issuer as required in proposed Sec. 15.11(a)(1)(iii).
\58\ 12 U.S.C. 5903(a)(4)(A)(iii)(I).
---------------------------------------------------------------------------

The safe harbor's requirement that a permitted payment stablecoin
issuer maintain at least 10 percent of its reserve assets as ``daily
liquidity'': demand deposits or money standing to the credit of an
account with a Federal Reserve Bank would help ensure that a permitted
payment stablecoin issuer has readily available funds necessary to meet
redemption requests. While all of the proposed reserve assets should be
liquid and easily monetizable, the requirement to have some minimum
level of immediately liquid funds is additional protection against the
risk that a permitted payment stablecoin issuer would be unable to meet
redemption requests in a timely manner, which is critical to avoid in
order to maintain confidence in the permitted payment stablecoin issuer
and the stablecoin industry as a whole. A minimum requirement of 10
percent would be in line with the largest 1-day redemption events
experienced by stablecoin issuers.\59\ The OCC invites comment on
whether an alternate minimum is appropriate.
---------------------------------------------------------------------------

\59\ Although the OCC referenced SEC Rule 2a-7 when drafting
these requirements due to certain similarities between money market
funds and permitted payment stablecoin issuers, the proposed
requirements diverge in certain respects based on inherent
differences between the two (e.g., reserve asset composition).
---------------------------------------------------------------------------

Including a baseline requirement to maintain a minimum percentage
of liquidity that is immediately available (without the need to sell
any assets, even highly liquid assets like Treasury securities) will
help ensure a permitted payment stablecoin issuer's ability to meet
redemption requests. The OCC invites comments on these and other
considerations, particularly on whether conservative liquidity
requirements are necessary. The proposed rule includes robust liquidity
requirements but does not include capital-based overcollateralization
or reserve asset buffer requirements. An alternative possibility would
be to remove some of the proposed liquidity requirements, though this
may warrant increased capital or buffer requirements.
The safe harbor would also require that a permitted payment
stablecoin issuer maintains at least 30 percent of its reserve assets
as deposits or insured shares payable upon demand, money standing to
the credit of an account with a Federal Reserve Bank, or amounts
receivable and due unconditionally within five business days on pending
sales of reserve assets, maturing reserve assets, or other maturing
transactions. This ``weekly'' liquidity would help ensure that a
permitted payment stablecoin issuer is able to meet a series of
redemption requests that takes place over multiple days. It will also
help prevent issuers from meeting the ``daily'' liquidity requirement
but otherwise maintaining a stock of assets that are less readily
monetizable. A minimum requirement of 30 percent ``weekly'' liquidity
would protect issuers against redemption runs that take place over
multiple days, a phenomenon experienced by stablecoin issuers in the
past, and a 30 percent minimum requirement would exceed the redemption
volumes seen during these redemption runs. In the absence of a minimum
``weekly'' (or other multi-day) requirement, an issuer might only have
its stock of 10 percent immediately available liquidity plus owned
securities that it would have to actually sell in order to monetize and
meet redemption requests. While permitted payment stablecoin issuers
must be prepared to monetize any such securities, it would be safer to
have a stock of liquid funds that will automatically become available
over the next several days as a first line of defense against multi-day
redemption runs.
The safe harbor would also require that a permitted payment
stablecoin issuer maintains no more than 40 percent of its reserve
assets at any one eligible financial institution, whether as deposits
or insured shares at any one insured depository institution, securities
custodied at any one eligible financial institution, bilateral reverse
repurchase agreements with any counterparty, or through other
exposures. This requirement would prevent an issuer from being overly
exposed to any one eligible financial institution. The spring 2023 bank
stress highlighted the risk that a stablecoin issuer's reserve assets
could be concentrated at one financial institution.\60\ While this
requirement would not eliminate the chance of losing reserve assets
because of distress at an eligible financial institution holding
reserve assets--or temporarily losing access to reserve assets--this
requirement would ensure that

[[Page 10218]]

permitted payment stablecoin issuers have other stocks of reserve
assets available to satisfy redemption requests. This requirement is
meant to capture all potential exposures to a counterparty. A permitted
payment stablecoin issuer could maintain deposits at a depository
institution while at the same have an affiliate of that depository
institution maintain custody of the issuer's securities or serve as a
counterparty in repurchase or reverse repurchase transactions. All of
these transactions could expose a permitted payment stablecoin issuer's
reserve assets to the health of a single eligible financial
institution. Accordingly, this requirement would aggregate exposures to
prevent excessive exposure to any one eligible financial institution.
The phrase ``or other exposures'' is meant to capture any other
exposure that creates a similar risk. The OCC invites comments on
alternate minimums besides 40 percent; the 40 percent measure would
ensure that no one eligible financial institution would have a majority
of a permitted payment stablecoin issuer's reserve assets and that
permitted payment stablecoin issuers spread relationships and
operational capabilities across multiple eligible financial
institutions in a way that prevents a permitted payment stablecoin
issuer coming to rely excessively on one eligible financial
institution.
---------------------------------------------------------------------------

\60\ See, e.g., Vicky Ge Huang et al., ``Circle's USDC
Stablecoin Breaks Peg With $3.3 Billion Stuck at Silicon Valley
Bank,'' Wall St. J. (March 11, 2023), <a href="https://www.wsj.com/articles/crypto-investors-cash-out-2-billion-in-usd-coin-after-bank-collapse-1338a80f?gaa_at=eafs&gaa_n=AWEtsqf6BGnzdLQv1oreAgKgnxQABkxhGMynOVp91Xs-RK02mjbolX7BJSkJ&gaa_ts=695a9bd0&gaa_sig=w4Oq80vSPZ596PZfArhzEcuuNsxMb2j69bfMwUqUB_reNYXHtEGgTB4fFwAj_zInsT7lUc5cSlYJbYUb4dEV_g%3D%3D">https://www.wsj.com/articles/crypto-investors-cash-out-2-billion-in-usd-coin-after-bank-collapse-1338a80f?gaa_at=eafs&gaa_n=AWEtsqf6BGnzdLQv1oreAgKgnxQABkxhGMynOVp91Xs-RK02mjbolX7BJSkJ&gaa_ts=695a9bd0&gaa_sig=w4Oq80vSPZ596PZfArhzEcuuNsxMb2j69bfMwUqUB_reNYXHtEGgTB4fFwAj_zInsT7lUc5cSlYJbYUb4dEV_g%3D%3D</a>.
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The safe harbor would also require that a permitted payment
stablecoin issuer maintain no more than 50 percent of the required
daily liquidity specified under proposed paragraph (c)(2)(i) at any one
eligible financial institution. This requirement would guard against
the risk that problems at one eligible financial institution prevent a
permitted payment stablecoin issuer from accessing its reserve assets.
If a permitted payment stablecoin issuer is dependent on one eligible
financial institution to maintain all or a large portion of its reserve
assets, the permitted payment stablecoin issuer may be excessively
exposed to, for example, operational concerns at that eligible
financial institution or even the risk of the institution's failure.
Proposed Sec. 15.11(c)(2)(i) is designed to ensure that permitted
payment stablecoin issuers have a sufficient minimum amount of readily
available funds to meet redemption requests. However, if that entire
amount consists of deposits at one insured depository institution, the
permitted payment stablecoin issuer is exposed to the risk that
problems at that insured depository institution could wholly prevent
the permitted payment stablecoin issuer from accessing its readily
available funds. Having at least one other stock of readily available
funds as part of a permitted payment stablecoin issuer's reserve assets
would help ensure that some readily available funds are accessible in
order to meet redemption requests. Placing deposits payable on demand
at multiple insured depository institutions, whether directly or
through deposit placement services, would mitigate the risk of over-
exposure to one particular insured depository institution.
Proposed Sec. 15.11(c)(2)(v) would also require, to qualify for
the safe harbor, that a permitted payment stablecoin issuer's reserve
assets have a weighted average maturity of no more than 20 days. This
would serve as a backstop against potential losses due to interest rate
increases. While permitted payment stablecoin issuers may permissibly
hold reserve assets with a maturity of up to 93 days, holding a
portfolio of reserve assets concentrated at the outer end of that
maturity limit exposes the issuer's reserve assets to losses due to
interest rate increases.\61\ Even small losses could undermine
confidence in a stablecoin given the importance of maintaining par and
ensuring a stable value. A limit on weighted average maturity imposed
across the entire portfolio of a permitted payment stablecoin issuer's
reserve assets would allow the issuer to hold the entire range of
permissible assets while ensuring that the portfolio in aggregate does
not have excess exposure to interest rate risk. A limit of 20 days
would still allow permitted stablecoin issuers in the full range of
permissible reserve assets (for example, newly issued 3-month Treasury
bills) while ensuring that reserve assets are not overly concentrated
in longer-dated issuances. The OCC invites comment on whether a
weighted average maturity limit of 20 days is appropriate, including
whether it would represent a binding constraint for current stablecoin
issuers and the desirability of higher or lower limits. The OCC
additionally invites comment on whether the weighted average maturity
requirement for a large issuer should differ from that for a smaller
issuer (e.g., by allowing smaller issuers to have a longer weighted
average maturity such as 30 or 40 days).
---------------------------------------------------------------------------

\61\ During the rapid increases in interest rates in the early
1980s, 3-month Treasury Bill secondary market rates increased from
12.05 percent to 15.37 percent over the period of a month. See Fed.
Reserve Econ. Data, ``Table Data--3-Month Treasury Bill Secondary
Market Rate, Discount Basis,'' <a href="https://fred.stlouisfed.org/data/WTB3MS">https://fred.stlouisfed.org/data/WTB3MS</a> (including Treasury Bill secondary market rates for February
8, 1980, and March 7, 1980). A change of this magnitude would result
in a 90-day security losing approximately 0.79 percent of its value.
---------------------------------------------------------------------------

As an example, a permitted payment stablecoin issuer with $20
billion of outstanding issuance value could meet the safe harbor by
placing at least $1 billion each at two insured depository
institutions. This would meet the requirement in proposed Sec.
15.11(c)(2)(i) that the permitted payment stablecoin issuer maintain at
least 10 percent ($2 billion in this example) of its required reserve
assets as readily available funds as well as the requirement in
proposed Sec. 15.11(c)(2)(iv) that the permitted payment stablecoin
issuer maintains no more than 50 percent of its readily available funds
at any one eligible financial institution ($1 billion in this example).
In order to qualify for the safe harbor, the permitted payment
stablecoin issuer would still need to satisfy proposed Sec.
15.11(c)(2)(iii), under which a permitted payment stablecoin issuer
could not maintain more than 40 percent of its reserve assets at any
one financial institution and proposed Sec. 15.11(c)(2)(ii), under
which a permitted payment stablecoin issuer must maintain at least 30
percent of its reserve assets as deposits or insured shares payable
upon demand, money standing to the credit of an account with a Federal
Reserve Bank, or amounts receivable and due conditionally within five
business days on pending sales of reserve assts, maturing reserve
assets, or other maturing transactions. In this example, the permitted
payment stablecoin issuer could not keep more than $8 billion in
reserve assets at any one institution (for instance, invested in a
single investment fund) and would also need to maintain at least $6
billion as deposits or shares payable upon demand, money standing to
the credit of an account with a Federal Reserve Bank, or amounts
receivable and due unconditionally within five business days on pending
sales of reserve assets or other maturing transactions. The issuer
would also need to ensure that its entire stock of reserve assets ($20
billion) complied with the requirement to have a weighted average
maturity of no more than 20 days. While compliance with the
diversification safe harbor would establish compliance with proposed
Sec. 15.11(c), it would not relieve a permitted payment stablecoin
issuer of its obligations under proposed Sec. 15.11(a). Notably, a
permitted payment stablecoin issuer would still be required to maintain
and demonstrate the operational capability to monetize its reserve
assets.
Option B would impose the same quantitative standards as mandatory
requirements, rather than an optional

[[Page 10219]]

safe harbor. Option B would not include the baseline principles-based
requirement. While Option B would remove flexibility, it would create a
more transparent and readily comprehensible set of requirements.
Permitted payment stablecoin issuers, payment stablecoin holders, and
other parties would be able to discern what requirements permitted
payment stablecoin issuers must adhere to with respect to the reserve
assets.
Proposed Sec. 15.11(d) would require a permitted payment
stablecoin issuer with an outstanding issuance value of $25 billion or
more to, on each business day, maintain at least 0.5 percent of its
reserve assets in the form of insured deposits or insured shares at an
insured depository institution, up to a cap of $500 million. While it
may not be practicable to maintain all deposits or shares as insured
deposits or insured shares, having some minimum amount of insured
deposits or shares will provide an additional measure of security for
reserve assets and can promote market and holder confidence about the
integrity of reserve assets. Though the required minimum amount is not
a large percentage, it would ensure that large permitted payment
stablecoin issuers have some stock of extremely safe and liquid assets:
insured deposits and insured shares that can be withdrawn freely and
that are not exposed to risks like interest rate risk. Having reserve
assets diffused through the banking system may promote confidence by
virtue of having at least some reserve assets held in traditional
depository institutions with which holders are already familiar (for
example, nearby community banks). Stablecoin holders may be reassured
by knowing that a minimum portion of reserve assets is maintained as
insured deposits, and the diffusion of reserve assets may mitigate
fears or contagion risks associated with rumors about the health of
particular depository institutions.
In theory, it would be ideal from the perspective of the safety and
soundness of the permitted payment stablecoin issuer if permitted
payment stablecoin issuers would be able to place all deposits, so they
are covered by applicable deposit insurance limits. However, current
deposit insurance requirements may make this impossible for larger
permitted stablecoin issuers. While permitted payment stablecoin
issuers may use services, such as deposit brokers, to distribute
deposits across eligible financial institutions--as long as permitted
payment stablecoin issuers are able to maintain the operational
capability to access and monetize these deposits--the finite number of
eligible financial institutions plus deposit insurance limits may
render it impossible for larger permitted payment stablecoin issuers to
insure more than a portion of their deposits. The OCC may revisit this
issue if deposit insurance requirements change, and the OCC invites
comments about alternative ways to address deposit insurance of reserve
assets held as deposits. The OCC recognizes the additional security
that deposit insurance would provide for stablecoin holders and also
recognizes the value of spreading deposits around a broad range of
depository institutions, rather than potentially having permitted
payment stablecoin issuer deposits concentrated at a small number of
depository institutions. Holding reserves at a very large number of
institutions, could, however, introduce additional operational risk
that a permitted payment stablecoin issuer would need to manage. The
thresholds in proposed Sec. 15.11(d) balance the value and security of
spreading reserve assets across multiple eligible financial
institutions, the capacity of the banking system to hold insured
deposits from any one single depositor, and the operational complexity
numerous depository relationships would entail.
Proposed Sec. 15.11(e) would require the permitted payment
stablecoin issuer to publish on its website by noon on the last day of
each month the composition of the issuer's reserves held pursuant to
the GENIUS Act as of noon of the last day of the prior month, using a
format substantially similar to the template provided in table 1 to
proposed Sec. 15.11(e). The report must contain the total number of
outstanding payment stablecoins issued by the issuer and the amount
(fair value) and composition of the reserves, including the average
tenor and geographic location of custody of each category of reserve
instruments. The information in the report, including the value of
reserve assets, should be as of the end of the previous month. This
implements the requirement in section 4(a)(1)(C) of the GENIUS Act (12
U.S.C. 5903(a)(1)(C)). To satisfy the geographic location requirement,
the OCC expects that it will generally be sufficient for permitted
payment stablecoin issuers to disclose the jurisdiction where reserve
assets are custodied or located.
Proposed Sec. 15.11(f) implements the applicable requirements of
section 4(a)(3) of the GENIUS Act (12 U.S.C. 5903(a)(3)). This
provision requires permitted payment stablecoin issuers to, each month,
have the information disclosed in the previous month-end report
examined by a registered public accounting firm. Proposed Sec.
15.11(f)(1) would require the examination of the previous month-end
report to occur by noon on the last day of each month and would require
the report to be published on the permitted payment stablecoin issuer's
website at the same time as the monthly report required under proposed
Sec. 15.11(e). Consistent with the Act, proposed Sec. 15.11(f)(2)
would require the Chief Executive Officer and Chief Financial Officer
(or the persons performing the equivalent functions) of the permitted
payment stablecoin issuer to submit a certification as to the accuracy
of the monthly report to the OCC. Under section 4(a)(3)(C) of the Act
(12 U.S.C. 5903(a)(3)(C)), any person who submits this required
certification knowing that such certification is false shall be subject
to the same criminal penalties as those set forth under 18 U.S.C.
1350(c).
Proposed Sec. 15.11(g) provides for the consequences and remedial
measures if a permitted payment stablecoin issuer does not comply with
the requirements of Sec. 15.11. Proposed Sec. 15.11(g)(1) would
provide that a permitted payment stablecoin issuer must notify the OCC
through its appropriate supervisory office on any day in which its
reserve asset amount has fallen below the required minimum in proposed
Sec. 15.11(a). Proposed Sec. 15.11(g)(2) would provide that a
permitted payment stablecoin issuer falling below the required minimum
would be barred from issuing new payment stablecoins until it had
remediated the shortfall except as necessary to facilitate a transfer
of payment stablecoins from one distributed ledger to another and
provided that the net outstanding issuance value does not increase.
Proposed Sec. 15.11(g)(3) would provide that, if a permitted payment
stablecoin issuer fails to meet its reserve asset requirement for 15
consecutive business days, it must begin liquidation of reserve assets
and redemption of outstanding payment stablecoins consistent with Sec.
15.12 and may not charge customers a fee to redeem their payment
stablecoins at any time during the liquidation. The OCC may extend the
time period under proposed Sec. 15.11(g)(3) in its sole discretion.
Because of the importance of maintaining minimum reserve asset levels,
the proposed rule would include automatic consequences for any non-
compliance intended to prevent any concerns from developing further.
This provision is intended to prevent chronic non-compliance with
minimum reserve asset requirements. The OCC expects to ensure
compliance with other

[[Page 10220]]

requirements in the proposed rule using traditional supervisory
methods, namely having examiners identify concerns that can be
escalated into enforcement actions, if necessary. Accordingly, proposed
Sec. 15.11(g)(4) provides that if at any point the OCC determines that
a permitted payment stablecoin issuer has not demonstrated that it
meets the reserve asset requirements in proposed Sec. 15.11(a), (b),
(c), or (d), the OCC may require the issuer to submit a plan describing
how the permitted payment stablecoin issuer will attain compliance and
the timeline for the plan. If the OCC determines, either before or
after the submission of a plan, that a permitted payment stablecoin
issuer faces a significant risk of being unable to attain compliance
with the reserve requirements in proposed Sec. 15.11 (a), (b), (c), or
(d) within a reasonable period, the OCC may order the issuer to
initiate redemption of all outstanding payment stablecoins. Proposed
Sec. 15.11(g)(4) also states that the OCC's authority to require a
compliance plan or order redemption does not limit the OCC's authority
to pursue other measures, including enforcement actions, if
appropriate.
3. Redemption (Proposed Sec. 15.12)
Section 15.12 of the proposed rule addresses redemption
requirements imposed by section 4(a)(1)(B) of the GENIUS Act (12 U.S.C.
5903(a)(1)(B)). Consistent with the statute, under proposed Sec.
15.12(a), a permitted payment stablecoin issuer must publicly disclose
its redemption policy.\62\ The OCC proposes that in disclosing its
redemption policy, the issuer must include, at a minimum, certain
information. Specifically, proposed Sec. 15.12(a)(1) provides that the
issuer must include a timeframe in which the issuer will redeem payment
stablecoins and the timeframe under which the issuer is required to
redeem payment stablecoins (which, under proposed paragraph Sec.
15.12(b)(1)(i) may not exceed two business days following the date of
the requested redemption). In proposed Sec. 15.12(a)(2), the OCC
proposes to require the issuer to include a statement consistent with
proposed Sec. 15.12(b)(1)(ii) that any discretionary limitations on
timely redemptions can only be imposed by the OCC, or in the case of a
State qualified payment stablecoin issuer, by the OCC, Federal Reserve,
or the State payment stablecoin regulator, as applicable. Proposed
Sec. 15.12(a)(3) requires that issuers include in their redemption
disclosures a statement explaining the scenarios when the redemption
period may be extended as provided for in proposed Sec. 15.12(c).
Proposed Sec. 15.12(a)(4) provides that the issuer must provide a
statement with clear instructions on how a payment stablecoin holder
can redeem a payment stablecoin, including a link to the website(s)
where a customer can redeem the payment stablecoin. Proposed Sec.
15.12(a)(5) would require the issuer to specify the minimum number of
payment stablecoins, if any, that the permitted payment stablecoin
issuer will redeem, provided that the issuer must redeem any number
greater than or equal to one payment stablecoin, subject to appropriate
customer screening and onboarding. In setting the requirement that a
permitted payment stablecoin issuer must redeem any number greater than
or equal to one payment stablecoin, the OCC is relying on a natural
reading of the definition of ``payment stablecoin.'' Specifically,
section 2(22) of the GENIUS Act (12 U.S.C. 5901(22)), defines ``payment
stablecoin'' as a digital asset that an issuer ``is obligated to
convert, redeem, or repurchase for a fixed amount of monetary value.''
Since ``payment stablecoin'' is singular, the statutory language
suggests that while an issuer could set a minimum redemption threshold
at a fraction of a payment stablecoin, an issuer must redeem any number
greater than or equal to one payment stablecoin to comply with the
GENIUS Act. Otherwise, the payment stablecoin would not be redeemable
for a fixed amount of monetary value.
---------------------------------------------------------------------------

\62\ Under section 2(22) of the GENIUS Act (12 U.S.C. 5901(22)),
the issuer of a payment stablecoin must be obligated to convert,
redeem, or repurchase a payment stablecoin for a fixed amount of
monetary value, not including a digital asset denominated in a fixed
amount of monetary value.
---------------------------------------------------------------------------

Proposed Sec. 15.12(b)(1) provides that an issuer's redemption
policy must provide clear and conspicuous procedures for timely
redemption of outstanding payment stablecoins. In proposed Sec.
15.12(b)(1)(i), the OCC is proposing to define ``timely'' to mean that
the permitted payment stablecoin issuer would have to redeem a payment
stablecoin no later than two business days following the date of the
requested redemption. The OCC is proposing this two-business day
timeframe as an outer limit on when a permitted payment stablecoin
issuer must redeem a payment stablecoin and understands that many
issuers may choose a timeframe that is less than two business days. The
OCC believes this timeframe provides sufficient responsiveness to
stablecoin holders who seek to redeem their stablecoins, while also
ensuring that issuers can appropriately manage liquidity demands.
Proposed Sec. 15.12(b)(1)(ii), consistent with the statute, provides
that discretionary limitations on timely redemptions can only be
imposed by the OCC or, in the case of a State qualified payment
stablecoin issuer, by the OCC, the Federal Reserve, or the State
payment stablecoin regulator, as applicable.
Proposed Sec. 15.12(c)(1) would provide that the period for timely
redemption is extended to seven calendar days if a permitted payment
stablecoin issuer faces redemption demands in excess of 10 percent of
its outstanding issuance value in a single 24-hour period. The OCC
proposes to use a 24-hour period for this requirement in recognition of
the likelihood that there may be significant demands to redeem payment
stablecoins outside of normal business hours and outside of the hours
when many reserve assets could be liquidated. As provided for in
proposed Sec. 15.12(c)(2), the extended redemption period applies to
all redemption requests that are outstanding at the time the 10 percent
threshold is met as well as any subsequent redemption requests
following the time the threshold is met. Proposed Sec. 15.12(c)(3)
clarifies that the extension is non-discretionary and that a permitted
payment stablecoin issuer may only redeem any of the outstanding or
subsequent redemption requests prior to the seven calendar day period
if the OCC determines that the issuer has the ability to redeem sooner
in an orderly fashion and through a fair and transparent process or the
OCC otherwise provides notice to the permitted payment stablecoin
issuer that the extended redemption period no longer applies. The OCC
expects that the permitted payment stablecoin issuer seeking to redeem
sooner than the seven calendar day period will engage with the OCC
through the issuer's supervisory office to provide evidence that it can
redeem in an orderly fashion and through a fair and transparent process
that does not unfairly advantage some payment stablecoin holders
relative to other payment stablecoin holders. Under proposed Sec.
15.12(c)(4), a permitted payment stablecoin issuer that exceeds that 10
percent threshold would be required to provide notice to the OCC
through its supervisory office within 24 hours. Using this 24-hour time
period will provide appropriate notice to the OCC and allow an
appropriate amount of time to facilitate the orderly liquidation of
reserve assets. These provisions are intended to facilitate the orderly
liquidation of sufficient reserve assets in the event of a spike in
redemption requests and

[[Page 10221]]

would help ensure financial stability by lowering the potential price
impact of a sudden liquidation of reserve assets. Proposed Sec.
15.12(c)(5) provides that the OCC, may in its discretion, extend timely
redemption described in proposed Sec. 15.12(b)(1) or (c)(1), as
applicable, if the OCC determines that the permitted payment stablecoin
issuer poses a threat to safety and soundness, financial stability, or
such an extension is otherwise in the public interest.
The requirements of this section apply only to the redemption of a
payment stablecoin by the permitted payment stablecoin issuer (and any
entity acting on behalf of the permitted payment stablecoin issuer) and
would not apply to secondary market trading. This section is not
intended to prevent permitted payment stablecoin issuers from
establishing criteria related to the participants with which permitted
payment stablecoin issuers will interact.
Proposed Sec. 15.12(d)(1) provides that a permitted payment
stablecoin issuer must also publicly, clearly, and conspicuously
disclose in plain language and in format that is readily noticeable to
customers, readily understandable by customers, and segregated from
other information: (i) the name of the permitted payment stablecoin
issuer that issues the payment stablecoin; (ii) that the permitted
payment stablecoin issuer is the entity that is obligated to convert,
redeem, or repurchase the payment stablecoin for a fixed amount of
monetary value; (iii) the link to the monthly composition report of the
relevant permitted payment stablecoin issuer's reserves as required
under proposed Sec. 15.11(e); and (iv) all fees associated with
purchasing or redeeming payment stablecoins. The OCC is including a
requirement that the disclosures under proposed Sec. 15.12(d)(1) are
readily noticeable by customers, readily understandable by customers,
and segregated from other information to provide more certainty on what
it means to ``publicly, clearly, and conspicuously disclose [the
information] in plain language.'' \63\ The OCC is proposing to include
the requirement that the disclosures be segregated from other
information to ensure that the information in the disclosures is not
combined with other non-relevant information that could obscure the
importance of these disclosures. Although the permitted payment
stablecoin issuer may include additional information beyond what is
required in proposed Sec. 15.12(d)(1) in the same disclosure, the
information required under proposed Sec. 15.12(d)(1) should be
sufficiently separate and must meet the other requirements outlined,
including that the information is readily noticeable and readily
understandable by customers. The OCC believes that the disclosures
required under proposed Sec. 15.11(d)(1) are consistent with section
4(a)(1)(B) of the GENIUS Act (12 U.S.C. 5903(a)(1)(B)) and are
particularly important in the situation where a permitted payment
stablecoin issuer issues more than one brand of payment stablecoin
either directly or through an affiliate (if the OCC limits permitted
payment stablecoin issuers to issuing a single brand of payment
stablecoin). The OCC believes that these disclosures are necessary to
prevent confusion and ensure that payment stablecoin holders understand
who has the ultimate obligation to redeem their payment stablecoin.
---------------------------------------------------------------------------

\63\ 12 U.S.C. 5903(a)(1)(B)(ii).
---------------------------------------------------------------------------

Proposed Sec. 15.12(d)(2) provides that an issuer must update the
disclosures in proposed Sec. 15.12(d)(1)(iv) if there are any changes
in the fees associated with purchasing or redeeming stablecoins and
provide customers at least seven calendar days' prior notice of the
change, including by securely delivering the notice to current
customers. Proposed Sec. 15.12(d)(3) provides that a permitted payment
stablecoin issuer must publish the disclosures in proposed Sec.
15.12(d)(1) and any updates made in accordance with proposed Sec.
15.12(d)(2) on the permitted payment stablecoin issuer's website.
Proposed Sec. 15.12(d)(4) provides that a permitted payment stablecoin
issuer must include the disclosures in proposed Sec. 15.12(d)(1) and
any updates made in accordance with proposed Sec. 15.12(d)(2) in any
customer agreements that it provides.
4. Risk Management (Proposed Sec. 15.13)
Section 4(a)(4)(A)(iv) of the GENIUS Act (12 U.S.C.
5903(a)(4)(A)(iv)) provides that the OCC must issue regulations
implementing appropriate operational, compliance, and information
technology risk management principles-based requirements and standards
that are tailored to the business model and risk profile of permitted
payment stablecoin issuers and are consistent with applicable law. This
provision also requires that Bank Secrecy Act and sanctions compliance
standards be implemented. The Bank Secrecy Act and sanctions compliance
requirements will be addressed in a different proposed rule. Proposed
Sec. 15.13 addresses the remaining requirements and standards required
under section 4(a)(4)(A)(iv) of the GENIUS Act. Proposed Sec. 15.13
also addresses interest rate risk management standards under section
4(a)(4)(A)(iii) of the GENIUS Act (12 U.S.C. 5903(a)(4)(A)(iii)).
The GENIUS Act requires that the regulation's requirements and
standards be ``principles-based.'' Accordingly, the OCC is proposing
flexible standards in Sec. 15.13 that scale based on the nature,
scope, and risk of a permitted payment stablecoin issuer's activities.
Most of the standards in proposed Sec. 15.13 are adapted from relevant
provisions of 12 CFR part 30, appendices A and B, which in turn
implement 12 U.S.C. 1831p-1.\64\ The OCC identified standards from
appendices A and B of part 30 that fit the requirements of section
4(a)(4)(A)(iii) or 4(a)(4)(A)(iv) of the GENIUS Act and then,
consistent with the statute, adapted and tailored those standards to
the business models of permitted payment stablecoin issuers, as
appropriate. In addition, on July 14, 2025, the OCC issued a joint
statement, together with the Federal Reserve and FDIC, on Risk
Management Considerations for Crypto-Asset Safekeeping,\65\ and the
standards in proposed Sec. 15.13 are consistent with the
considerations described in the joint statement.\66\
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\64\ While the standards listed in 12 U.S.C. 1831p-1 provide a
useful reference point for standards that may be applicable to
permitted payment stablecoin issuers, the OCC is not invoking 12
U.S.C. 1831p-1 as a source of authority for issuing these risk
management requirements. Accordingly, the specific requirements for
violating 12 U.S.C. 1831p-1 would not necessarily apply to permitted
payment stablecoin issuers (e.g., a mandatory plan).
\65\ See OCC, ``Agencies Issue Joint Statement on Risk-
Management Considerations For Crypto-Asset Safekeeping'' (July 14,
2025), <a href="https://www.occ.gov/news-issuances/news-releases/2025/nr-ia-2025-68.html">https://www.occ.gov/news-issuances/news-releases/2025/nr-ia-2025-68.html</a>.
\66\ Consistent with the recommendations in the Digital
Financial Technology Report, the OCC intends to provide additional
clarity with respect to digital asset activities undertaken by OCC-
supervised entities.
---------------------------------------------------------------------------

Proposed Sec. 15.13(a)(1) requires that a permitted payment
stablecoin issuer have internal controls and information systems that
are appropriate for the size and complexity of the permitted payment
stablecoin issuer and the nature, scope, and risk of its activities and
that provide for: (i) an organizational structure with appropriate
segregation of duties and an internal control structure that
establishes clear lines of authority and responsibility for monitoring
adherence to established policies; (ii) effective risk assessment;
(iii) timely and accurate financial, operational, and regulatory
reporting, including with respect to reports required under proposed
part 15; (iv) adequate procedures to safeguard, manage, control, and
monetize assets, including reserve

[[Page 10222]]

assets; and (v) compliance with applicable laws and regulations.
Internal controls refer to the systems, policies, procedures, and
processes effected by the board of directors and other personnel to
safeguard permitted payment stablecoin issuer assets, limit or control
risks, achieve permitted payment stablecoin issuer objectives, and
ensure compliance with applicable laws and regulations. Effective
internal controls help the board of directors and management safeguard
the permitted payment stablecoin issuer's resources and comply with
laws and regulations, as well as reduce the possibility of significant
errors and irregularities, and assist in their timely detection when
errors and irregularities do occur. Internal controls must also include
an effective risk assessment since a permitted payment stablecoin
issuer cannot effectively manage its risks without an understanding of
its risk profile. The internal controls standards in proposed Sec.
15.13(a)(1) are modeled on the internal controls standards in 12 CFR
part 30, with some adjustments to accommodate the particular activities
and risks of permitted payment stablecoin issuers. For example, the
procedures to safeguard, manage, control, and monetize assets will be
expected to include measures to monitor and ensure the deposit
concentration and diversification requirements are met on a daily
basis.\67\ Likewise, procedures will be expected to address potential
vulnerabilities related to fraud and the theft of payment stablecoins
or other assets.
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\67\ In spring 2023, interest rate increases contributed to the
failure of Silicon Valley Bank, which in turn caused the value of
one stablecoin, USDC, to fall below $1 in the secondary market when
it became evident that much of USDC's reserves were held at Silicon
Valley Bank. This event illustrates the potential knock-on effects
of changes in interest rates and the importance of continuous
monitoring for stablecoins, particularly if acute stress creates
situations where issuers are unable to access reserve assets.
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The OCC proposes that Sec. 15.13(a)(2) require permitted payment
stablecoin issuers have an internal audit system that is appropriate to
the size and complexity of the permitted payment stablecoin issuer and
the nature, scope, and risk of its activities and that provides for (i)
adequate monitoring of the system of internal controls through an
internal audit function, or for a permitted payment stablecoin issuer
whose size, complexity or scope of operations does not warrant a full
scale internal audit function, a system of independent reviews of key
internal controls; (ii) independence and objectivity; (iii) qualified
persons responsible for the audit function; (iv) adequate independent
testing and review of internal controls and information systems,
verification of published information available to customers,
calculations for required reserves, and regulatory filings; (v)
adequate documentation of tests and findings and any corrective
actions; (vi) verification and review of management actions to address
deficiencies; and (vii) review by the institution's audit committee or
board of directors of the effectiveness of the internal audit system.
Internal audit systems provide objective, independent reviews of
permitted payment stablecoin issuer activities, internal controls, and
information systems to help the board of directors and management
monitor and evaluate internal control adequacy and effectiveness. An
internal audit system, among other items, is expected to independently
test and review systems, as appropriate, related to (1) a permitted
payment stablecoin issuer's compliance with the GENIUS Act and
requirements in any final rules implementing the GENIUS Act; (2)
payment systems; and (3) third-party risk management. Well-planned,
properly structured audit programs are essential to effective risk
management and internal control systems. Effective internal audit
programs are a critical defense against fraud and provide vital
information to the board of directors about the effectiveness of
internal controls systems. An internal audit program's responsibilities
include evaluating compliance systems, safeguards around use of payment
systems, and risks posed by relationships with and dependence on third
parties. While it is important that internal audit functions be
conducted by qualified persons with an appropriate level of
independence from other business lines, the proposed rule would not
mandate a particular organizational structure (for example, three lines
of defense). Proposed Sec. 15.13(a)(2) would not prescribe a one-size-
fits-all approach to risk management. Smaller permitted payment
stablecoin issuers with a lower risk profile may be able to comply
using a simpler, less delineated, organizational structure, or may be
able to outsource certain functions such as the internal audit
function, while larger permitted payment stablecoin issuers, with
higher risk-profiles, may require organizational structures with more
clearly delineated risk management functions, including internal audit
personnel.
Proposed Sec. 15.13(a)(3) addresses interest rate risk and would
require a permitted payment stablecoin issuer to (i) manage interest
rate risk in a manner that is appropriate to the size and complexity of
the permitted payment stablecoin issuer and the complexity of its
assets and liabilities and (ii) provide for periodic reporting to
management and the board of directors regarding interest rate risk with
adequate information for management and the board of directors to
assess the level of risk. While permitted payment stablecoin issuers
hold reserve assets that may, depending on their type, have limited or
no duration (e.g., in the case of deposits or insured shares payable
upon demand), it is still important for permitted payment stablecoin
issuers to be mindful of this risk, particularly in light of the role
of interest rate risk in the failures of previous money market funds,
whose investments, like those of permitted payment stablecoin issuers,
were supposed to be limited to short-duration safe assets.\68\
Increases in interest rates, particularly in short-time periods, can
reduce the value of interest-sensitive reserve assets, potentially
impacting their marketability and liquidity as well as their fair
value. Similarly, changes in interest rates can affect the earnings of
permitted payment stablecoin issuers since their earnings may rely in
substantial part on interest earned on reserve assets. Likewise,
increases in interest rates may reduce the demand for payment
stablecoins, particularly since permitted payment stablecoin issuers
are prohibited from paying interest to stablecoin holders solely in
connection with the holding, use, or retention of payment stablecoins
under proposed Sec. 15.10(c)(4). The GENIUS Act explicitly authorizes
interest rate risk management standards under section 4(a)(4)(A)(iii)
(12 U.S.C. 5903(a)(4)(A)(iii)) whereas section 4(a)(4)(A)(iv) (12
U.S.C. 5903(a)(4)(A)(iv)) authorizes the other requirements and
standards proposed in Sec. 15.13. The OCC proposes that interest rate
risk management standards be included under proposed Sec. 15.13 since
it is a risk management standard like the

[[Page 10223]]

other standards already included in proposed Sec. 15.13.
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\68\ Mismanagement of interest rate risk was a leading cause of
failure in two of the three money market funds in the United States
in which the net asset value of the fund fell below $1 (also
referred to as ``breaking the buck''), ultimately leading to
liquidation. See In the Matter of John E. Backlund, et al.,
Investment Company Act Release No. 23639 (January 11, 1999) (SEC
administrative order involving the Community Bankers U.S. Government
Money Market Fund liquidated in 1994); In the Matter of First
Multifund Advisory Corp. and Milton Mound, Initial Decision, File
No. 3-5881 (December 29, 1982) (SEC initial decision involving the
First Multifund for Daily Income liquidated in 1978).
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The OCC proposes that Sec. 15.13(a)(4) require a permitted payment
stablecoin issuer's asset growth to be prudent and commensurate with a
permitted payment stablecoin issuer's risk management capabilities,
operational capacity, and staffing. While there are no hard limits to
how quickly permitted payment stablecoin issuers may grow, permitted
payment stablecoin issuers must ensure that growth does not undercut
the permitted payment stablecoin issuer's capabilities to comply with
the requirements of this rule and other applicable law. For example,
rapid issuance of new stablecoins would require rapid increase in
reserves, and permitted payment stablecoin issuers must ensure that
they maintain the capabilities to maintain these reserves in compliance
with proposed Sec. 15.11 and maintain the ability to access and
monetize the reserves in order to meet redemption requests.
The OCC proposes that Sec. 15.13(a)(5) require that a permitted
payment stablecoin issuer establish and maintain a risk management
system that is commensurate with the permitted payment stablecoin
issuer's size and complexity and the nature and scope of its operations
to evaluate and monitor earnings and ensure that earnings are
sufficient to support operations and maintain the capital levels that
would be required under subpart E of proposed part 15. To reflect the
distinct characteristics of permitted payment stablecoin issuers, the
proposed standards on earnings in proposed Sec. 15.13(a)(5) do not
include all the listed elements in paragraph II.H in appendix A to 12
CFR part 30, from which the earnings standard in proposed Sec.
15.13(a)(5) was adapted. Nevertheless, under the proposed rule,
permitted payment stablecoin issuers would be expected to comply with
the overarching requirement to evaluate and monitor earnings. It may be
particularly important for permitted payment stablecoin issuers to
evaluate the volatility and sustainability of earnings, since changes
in short-term interest rates could have sudden impacts on permitted
payment stablecoin issuer earnings.
Proposed Sec. 15.13(a)(6) addresses insider and affiliate
transactions and is intended to protect a permitted payment stablecoin
issuer from entering into detrimental transactions with insiders or
affiliates. Under proposed paragraph (a)(6)(i), a permitted payment
stablecoin issuer would be required to ensure that transactions between
the permitted payment stablecoin issuer and insiders or affiliates: (1)
are not excessive and do not pose significant risks of material
financial loss; (2) are conducted on terms that are the same or at
least as favorable to the permitted payment stablecoin issuer as those
prevailing at the time for comparable transactions with or involving
non-insiders or non-affiliates (or in the absence of comparable
transactions, are offered on terms and under circumstances that, in
good faith would be offered to, or would apply to non-affiliates or
non-insiders); and (3) are appropriately documented and reviewed by the
board of directors. Proposed paragraph (a)(6)(ii) would require a
permitted payment stablecoin issuer to appropriately monitor and
validate compliance with these requirements.
Proposed Sec. 15.13(a)(7) would provide requirements for
overseeing third-party service provider arrangements. Specifically, a
permitted payment stablecoin issuer must (i) exercise appropriate due
diligence in selecting its service providers; (ii) require its service
providers by contract to implement appropriate measures designed to
meet the requirements of part 15; and (iii) as appropriate, monitor its
service providers to confirm they have satisfied their obligations
under proposed part 15. As part of this monitoring, permitted payment
stablecoin issuers should review audits, summaries of test results, or
other equivalent evaluations of its service providers.\69\
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\69\ The OCC anticipates that any updates to the OCC's Third-
Party Risk Management guidance will explicitly address permitted
payment stablecoin issuers.
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Proposed Sec. 15.13(a)(8) would require a permitted payment
stablecoin issuer to (i) appropriately monitor and validate compliance
with the requirements of Sec. 15.11 and (ii) manage liquidity and
concentration risk in a manner that is appropriate to the business
model and risk profile of the permitted payment stablecoin issuer.
Proposed Sec. 15.13(b)(1) provides that a permitted payment
stablecoin issuer must implement a comprehensive written information
security risk and control framework, including a program that assesses
and manages information technology and information security risks.
Under proposed Sec. 15.13(b)(2), the board of directors of the
permitted payment stablecoin issuer, or an appropriate board committee,
must approve the information technology and security program. The board
must oversee the development, implementation, and maintenance of the
program, including the appointment of a qualified Information
Technology and Security Officer. The oversight required of the board or
committee includes assigning specific responsibility for program
implementation and review of program-related reports.
Under proposed Sec. 15.13(b)(3), a permitted payment stablecoin
issuer's information technology and security program must include (i)
an inventory and classification of assets, processes, and sensitivity
of data; (ii) controls supporting and safeguarding sensitive
information and processes; (iii) evaluation, validation, and reporting
processes to ensure that key information technology systems and
controls, including smart contracts, are operating as intended; (iv)
periodic independent testing; and (v) a comprehensive and effective
incident identification and assessment process and incident response
program.
Under proposed Sec. 15.13(b)(4), a permitted payment stablecoin
issuer's information technology and security program must include
administrative, technical, and physical safeguards designed to (i)
ensure the security and confidentiality of records containing nonpublic
personal information about a customer; (ii) protect against any
anticipated threats or hazards to the security or integrity of such
records; (iii) protect against unauthorized access to or use of such
records that could result in substantial harm or inconvenience to any
customer; and (iv) ensure the proper disposal of such records.
Proposed Sec. 15.13(b)(5) provides that a permitted payment
stablecoin issuer must develop, implement, and maintain appropriate
measures to ensure secure handling of digital assets, including private
key management, backup, and recovery incorporating: (i) relevant
technical, operational, strategic, market, legal, and compliance
considerations relating to each digital asset and its underlying
ledger; and (ii) material developments specifically related to
supported digital assets and their underlying ledgers.\70\
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\70\ If a permitted payment stablecoin issuer holds digital
assets on a customer's behalf, the permitted payment stablecoin
issuer's risk management practices must reflect this activity.
Consistent with the July 14, 2025 Joint Statement on Risk-Management
Considerations for Crypto-Asset Safekeeping, a permitted payment
stablecoin issuer holding digital assets on a customer's behalf
would be required to maintain risk management practices, and
information security practices in particular, that reflect the
permitted payment stablecoin issuer's capacity to understand a
complex and evolving asset class, ability to ensure a strong control
environment, and appropriate contingency plans to address
unanticipated challenges in effectively providing services to
customers.

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[[Page 10224]]

Proposed Sec. 15.13(b)(6) would require that a permitted payment
stablecoin issuer monitor, evaluate, and adjust, as appropriate the
information technology and security program in light of any relevant
changes in technology, the sensitivity of its customer information,
internal or external threats, and the permitted payment stablecoin
issuer's own changing business arrangements, such as mergers and
acquisitions, alliances and joint ventures, third-party arrangements,
and changes to applicable information systems.
Proposed Sec. 15.13(b)(7) would provide that a permitted payment
stablecoin issuer must conduct a reasonable investigation when it
becomes aware of an incident of unauthorized access to sensitive
customer information, including a customer's private key, to determine
the likelihood that the information has been or will be misused. The
requirements in proposed Sec. 15.13(b)(7) are similar to the
requirements codified in supplement A to appendix B to part 30. If the
permitted payment stablecoin issuer determines that misuse of customer
information has occurred or is reasonably possible, the permitted
payment stablecoin issuer must notify the customer or customers
affected or possibly affected as well as the OCC as soon as possible.
Customer notice must be delayed if an appropriate law enforcement
agency determines that notification will interfere with a criminal
investigation and provides the permitted payment stablecoin issuer with
a written request for the delay. If delayed by investigation, the
permitted payment stablecoin issuer must notify its customers of the
misuse or possible misuse of customer information as soon as law
enforcement notifies the permitted payment stablecoin issuer that
notification will no longer interfere with the investigation. Proposed
Sec. 15.13(b)(7)(ii) recognizes that there may be situations where the
permitted payment stablecoin issuer determines that a group of files
has been accessed improperly but is unable to identify which specific
customers' information has been accessed. If the circumstances of the
unauthorized access lead the permitted payment stablecoin issuer to
determine that misuse of the information is reasonably possible, it
must notify all customers in the group.
Proposed Sec. 15.13(b)(8) would provide that a permitted payment
stablecoin issuer's information technology and security program must
include measures to ensure continuity of operations and recover
critical functions in the face of disruptions, including by business
impact analyses, testing of vulnerabilities, and testing with critical
service providers. Recent corporate information technology system
failures have demonstrated the importance of measures to maintain
operational resilience. Permitted payment stablecoin issuers should
ensure that they have sufficient controls to reliably address
operational issues that may arise with burning and minting new
stablecoins and should conduct appropriate due diligence before
supporting any new distributed ledger. Operational resilience will be
particularly important for stablecoin issuers, who will depend on
customer confidence in the stable value and availability of their
stablecoins.
5. Audits, Reports, and Supervision (Proposed Sec. 15.14)
a. Examinations
Section 6(a)(1) of the GENIUS Act (12 U.S.C. 5905(a)(1)) authorizes
primary Federal payment stablecoin regulators, including the OCC, to
supervise permitted payment stablecoin issuers, as defined in the
statute, that are not State qualified payment stablecoin issuers with
an outstanding issuance of less than $10 billion in payment
stablecoins. Section 6(a)(3) of the GENIUS Act (12 U.S.C. 5905(a)(3))
authorizes the OCC to examine permitted payment stablecoin issuers to
assess the nature of their operations and the financial condition of
the permitted payment stablecoin issuer; the financial, operational,
technological, compliance, and other risks associated within the
permitted payment stablecoin issuer that may pose a threat to the
safety and soundness of the permitted payment stablecoin issuer or the
stability of the financial system of the United States; and the systems
of the permitted payment stablecoin issuer for monitoring and
controlling the risks. Pursuant to section 6(a)(4)(C) of the GENIUS Act
(12 U.S.C. 5905(a)(4)(C)), the OCC may only request examinations at a
cadence and in a format that is similar to that required for similarly
situated entities regulated by the OCC.
Proposed Sec. 15.14(a) provides that the OCC will conduct a full-
scope examination of every permitted payment stablecoin issuer subject
to its supervision at least once during each 12-month period, unless
otherwise specified in proposed Sec. 15.14(d). A full scope
examination refers to the comprehensive review of a permitted payment
stablecoin issuer's financial condition, risk management practices,
compliance with laws and regulations, and overall safety and soundness.
The OCC's proposed exercise of its examination authority over permitted
payment stablecoin issuers mirrors the OCC's current examination
authority over national banks and Federal savings associations.\71\
This mirroring ensures the OCC is requesting examinations and reports
at a cadence and in a format that is similar to that required for
similarly situated entities the OCC regulates, as required by section
6(a)(4)(C) of the GENIUS Act (12 U.S.C. 5905(a)(4)(C)).
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\71\ See 12 CFR 4.6 and 4.7.
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Consistent with the OCC's statutory authority to supervise
permitted payment stablecoin issuers, the OCC proposes that Sec.
15.14(d) would provide the OCC with the option to examine some
permitted payment stablecoin issuers on an 18- to 36-month cycle, as
determined by the OCC in its sole discretion, if the issuers satisfy
the following conditions: (1) the permitted payment stablecoin issuer
currently is not subject to a formal enforcement proceeding or order;
(2) no person acquired control, as specified in Sec. 15.14(m), of the
permitted payment stablecoin issuer during the preceding 12-month
period in which a full-scope examination would have been required but
for proposed Sec. 15.14(d); (3) the permitted payment stablecoin
issuer has an outstanding issuance value of less than $1 billion or
less than $25 billion in total monthly trading volume; and (4) the
permitted payment stablecoin issuer is in compliance with all of the
reserve requirements set forth in proposed Sec. 15.11 and the
reporting requirements in proposed Sec. 15.14. The proposed criteria
for certain permitted payment stablecoin issuers to qualify for an 18-
to 36-month examination cycle are similar to the factors the OCC
considers for national banks and Federal savings associations under 12
CFR 4.6(b).
Consistent with the OCC's statutory authority under the GENIUS Act
and the OCC's supervisory authority over national banks and Federal
savings associations, proposed Sec. 15.14(e) allows the OCC to conduct
examinations of permitted payment stablecoin issuers as frequently as
the agency deems necessary, including examinations of a limited
scope.\72\ The OCC has proposed this provision to ensure the agency has
clear authority to conduct ad hoc examinations when emergencies or
risks to the safety and soundness of a permitted payment stablecoin
issuer or the financial stability of the United States require the
agency to deviate from

[[Page 10225]]

its routine 12- or 18- to 36-month examination cycle.
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\72\ See id.; 12 U.S.C. 5905(a)(3).
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Proposed Sec. 15.14(b) requires that, upon request, permitted
payment stablecoin issuers must grant OCC examiners prompt and complete
access to all officers, directors, employees, agents, and relevant
books, records, or documents of any type. The OCC, through its
examination authority over national banks and Federal savings
associations, has authority to access the officers, agents, and books
and records of these institutions.\73\ The books and records of a
permitted payment stablecoin issuer include but are not limited to,
information retained on distributed ledgers. Sections 6(a)(1), (3), and
(4) of the GENIUS Act (12 U.S.C. 5905(a)(1), (3), and (4)) give the OCC
similar authority to supervise and examine permitted payment stablecoin
issuers. Proposed Sec. 15.14(b) applies the OCC's examination
authority to permitted payment stablecoin issuers in the same manner
that it is applied to national banks and Federal savings associations.
Additionally, proposed Sec. 15.14(c) clarifies that the OCC may
conduct examinations either on site or remotely. Proposed Sec.
15.14(f) provides that all permitted payment stablecoin issuers must
maintain a complete set of books and records in English. Proposed Sec.
15.14(g) requires all permitted payment stablecoin issuers to develop
and implement a records retention policy that ensures the permitted
payment stablecoin issuer can demonstrate compliance with the GENIUS
Act, this part, and all applicable laws and regulations.
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\73\ 12 U.S.C. 481 and 1464.
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b. Reports
Section 6(a)(2) of the GENIUS Act (12 U.S.C. 5905(a)(2)) requires
that each permitted payment stablecoin issuer shall, upon request,
submit to the appropriate Federal payment stablecoin regulator a report
on: the financial condition of the permitted payment stablecoin issuer;
the systems of the permitted payment stablecoin issuer for monitoring
and controlling financial and operating risks; compliance by the
permitted payment stablecoin issuer (and any subsidiary thereof) with
the GENIUS Act; and the compliance of the Federal qualified nonbank
payment stablecoin issuer with the Bank Secrecy Act and with laws
authorizing the imposition of sanctions and implemented by the
Secretary of the Treasury. Section 6(a)(4) of the GENIUS Act (12 U.S.C.
5905(a)(4)) requires the OCC to take certain actions to promote
efficiency in the supervision and examination of permitted payment
stablecoin issuers. The OCC, in supervising and examining permitted
payment stablecoin issuers, to the fullest extent possible, must use
existing supervisory reports and other supervisory information and
avoid duplication of examination activities, reporting requirements,
and requests for information.
Proposed Sec. 15.14(j) implements section 6(a)(2) of the GENIUS
Act by requiring each permitted payment stablecoin issuer subject to
the requirements of section 6(a)(1) of the Act to, upon request, submit
to the OCC a report on: (1) the financial condition of the permitted
payment stablecoin issuer; (2) the systems of the permitted payment
stablecoin issuer for monitoring and controlling financial and
operating risks; (3) compliance by the permitted payment stablecoin
issuer (and any subsidiary thereof) with the GENIUS Act and proposed
part 15; and (4) compliance of the permitted payment stablecoin issuer
with the Bank Secrecy Act and with laws authorizing the imposition of
sanctions and implemented by the Secretary of the Treasury. In an
effort to clarify the GENIUS Act's requirements, the OCC has proposed
in Sec. 15.14(j)(4) expanding the requirement that Federal qualified
nonbank payment stablecoin issuers produce reports of compliance with
the requirements of the Bank Secrecy Act and with laws authorizing the
imposition of sanctions and implemented by the Secretary of the
Treasury to all permitted payment stablecoin issuers.\74\
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\74\ The OCC notes that section 6(a)(2) of the GENIUS Act (12
U.S.C. 5905(a)(2)) requires all permitted payment stablecoin issuers
to provide the subsequent list of reports in section 6(a)(2)(A)
through (D) to the OCC upon request, whereas section 6(a)(2)(D)
refers to the compliance of ``the Federal qualified nonbank payment
stablecoin issuer with the requirements of the Bank Secrecy Act.''
Based on the structure of section 6(a)(2), the OCC believes all
permitted payment stablecoin issuers must, upon request, produce
each of the listed reports and that the OCC could request the report
required in section 6(a)(2)(D) from a permitted payment stablecoin
issuer. Additionally, section 6(a)(1) of the GENIUS Act (12 U.S.C.
5905(a)(1)) gives the OCC supervisory authority over all permitted
payment stablecoin issuers, which provides the OCC with further
authority to request the report in section 6(a)(2)(D).
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In addition to the regulations codifying the reporting requirements
in section 6(a)(2) of the GENIUS Act (12 U.S.C. 5905(a)(2)),\75\
pursuant to its supervisory authority in section 6(a)(1) of the Act (12
U.S.C. 5905(a)(1)), the OCC is proposing in Sec. 15.14(h) to require
permitted payment stablecoin issuers to submit on a weekly basis, in
the manner and form specified by the OCC, a confidential report
containing the information requested in the form that will be available
at <a href="http://www.occ.gov">www.occ.gov</a>. At a high level, the OCC is requesting a permitted
payment stablecoin issuer provide information regarding the issuance
and redemption, trading volume, and reserve assets for each payment
stablecoins it issues. The report would include information relating to
the blockchains the payment stablecoin is listed on, outstanding
issuance value, secondary market activity and price movement,
redemption volume and times, detailed information regarding reserve
assets, and other relevant information. For more information about the
specific information requested, consult the form that will be available
at <a href="http://www.occ.gov">www.occ.gov</a>. The OCC believes that requiring a permitted payment
stablecoin issuer to provide a confidential set of data on a weekly
basis for each payment stablecoins it issues will allow the OCC to
understand the permitted payment stableco

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