The 60-day comment period on the OCC’s 376-page Genius Act implementation proposal closed in early May. The OCC’s proposal covers stablecoin issuance, redemption, reserve management, custody standards, and yield restrictions for the issuers under its oversight, which includes national bank-owned issuers, federally licensed nonbanks, larger state-chartered issuers, and foreign issuers operating in the U.S.
The yield provisions generated the most intense commentary. Banks, led by a joint ABA and 52 state bankers association letter, urged the OCC to broaden its “rebuttable presumption” against third-party yield arrangements, expanding its definition of “related third parties” to include stablecoin distributors and promoters. Crypto firms including Coinbase, Circle, and PayPal argued the presumption goes beyond what the statute permits, and urged the OCC to clarify that third-party loyalty programs and pre-existing rewards arrangements are not presumptively prohibited.
On reserves and custody, banks argued the OCC is improperly assigning reporting and monitoring obligations to custodians that properly belong to issuers. Fintechs pushed back on reserve diversification requirements and the suggestion of limiting issuers to a single stablecoin brand. Both camps urged better coordination across the multiple regulators (OCC, FDIC, FinCEN, OFAC, Treasury) simultaneously issuing Genius Act rules on compressed timelines.
Comments from Banks: The OCC has significant discretion in how it finalizes these rules, and the comment record will matter. For banks considering stablecoin issuance through a subsidiary, the final custody standards and reserve requirements will determine capital and operational costs. For banks acting as reserve custodians for stablecoin issuers, watch closely for how the final rule delineates custodian versus issuer obligations. The current proposal may over-assign compliance duties to the custodian side.