OCC Proposed Stablecoin Rule Under the GENIUS Act

Posted by Erin Hall on March 3, 2026

Below please find an Executive Summary for Credit Union Leadership

Distinguishing This OCC NPRM from the NCUA PPSI NPRM

It is important to clearly distinguish this proposal from the recent NCUA proposed rule regarding credit union engagement with permitted payment stablecoin issuers (PPSIs). The NCUA’s PPSI NPRM focuses on when and how federal credit unions may establish, invest in, or otherwise participate in PPSI structures under the Federal Credit Union Act, including through CUSOs or subsidiaries. By contrast, the February 25, 2026 proposal issued by the Office of the Comptroller of the Currency (OCC) implements the prudential and supervisory framework for PPSIs themselves under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act).

In short, the NCUA PPSI NPRM governs credit union participation in the stablecoin ecosystem, while the OCC proposal governs the capital, reserve, liquidity, supervision, and structural requirements applicable to federally supervised stablecoin issuers. The OCC rule is therefore foundational and market-defining: it establishes the regulatory baseline under which national banks, federal nonbank issuers, and certain transitioning state issuers will operate — including entities that may compete directly with credit unions in payments and stored-value markets.

Overview and Regulatory Context

On February 25, 2026, the OCC issued its first comprehensive proposed rule implementing key provisions of the GENIUS Act, enacted in July 2025. The Act created a statutory framework for “permitted payment stablecoin issuers” (PPSIs), but left detailed capital, liquidity, operational, and supervisory standards to federal regulators. The OCC’s proposal represents the first fully articulated prudential regime for federally supervised stablecoin issuers and positions the OCC at the center of oversight for national bank subsidiaries, federal thrifts, uninsured national trust banks, federal branches of foreign banks, registered foreign issuers, and newly authorized federal nonbank stablecoin issuers.

The Proposed Rule fills significant statutory gaps but also signals that the regime will evolve over time. The OCC posed more than 200 questions for public comment, indicating that several core elements — particularly capital treatment, reserve buffers, diversification standards, and size-based tailoring — remain unsettled.

Scope, Structure, and Permitted Activities

The GENIUS Act restricts issuance of payment stablecoins in the United States to PPSIs. The OCC’s proposal mirrors the statute’s narrow activity limitations: issuers may issue and redeem stablecoins, manage reserves, provide custody for stablecoins and reserve assets, and conduct activities directly supporting those functions. The OCC clarifies that supporting activities may include limited crypto-asset holdings for operational purposes, such as paying blockchain transaction fees, and technology testing. The overall business model, however, remains tightly constrained.

The proposal incorporates affiliation standards grounded in the control framework of the Bank Holding Company Act, meaning “control” and affiliate status may be triggered even without majority ownership. This has material implications for partnership structures, white-label arrangements, and minority investment models.

The OCC would also apply Change in Bank Control Act procedures, potentially requiring prior notice for acquisitions of 10% or more of a voting interest in a PPSI, effectively importing bank-style ownership oversight into the stablecoin sector.

Yield Prohibition and Anti-Evasion Framework

The GENIUS Act prohibits PPSIs from paying interest or yield to holders solely for holding or using a stablecoin. The OCC extends this prohibition through an anti-evasion presumption. If an issuer compensates an affiliate or related third party, and that entity in turn pays yield to stablecoin holders tied to ownership of the coin, the OCC may treat the structure as an indirect violation of the statutory ban.

Although merchant discounts and legitimate non-affiliate revenue-sharing arrangements are not intended to be prohibited, the affiliation standards could capture a broader range of relationships than anticipated. This provision meaningfully narrows structural flexibility for white-label and co-branded issuance models.

Reserve Requirements and Asset Eligibility

The proposal requires that the fair market value of reserve assets equal or exceed the par value of outstanding stablecoins at all times. The fair-value approach reinforces the expectation that issuers must be able to meet redemption demands even under stressed market conditions.

Eligible reserve assets include U.S. currency, Federal Reserve balances, FDIC-insured demand deposits, Treasury securities with maturities of 93 days or less, qualifying repurchase agreements, and government money market funds invested solely in eligible assets. Stablecoins and other crypto-assets are explicitly excluded. Excess reserves may be withdrawn only monthly, following required examination and certification procedures.

The OCC is considering whether to require an explicit reserve buffer (e.g., 1% overcollateralization) or impose valuation haircuts on certain assets, which could materially increase conservatism in the final framework.

Reserve Diversification and Liquidity Standards

The OCC proposes either a principles-based diversification framework with an optional safe harbor, or mandatory quantitative limits. Metrics under consideration include minimum daily liquidity of 10% held as demand deposits or Federal Reserve balances; minimum weekly liquidity of 30% convertible within five business days; a 40% cap on exposure to any one eligible financial institution; a 50% cap within the daily liquidity bucket; and a weighted average maturity limit of 20 days.

Issuers with at least $25 billion in stablecoin issuance would be required to hold at least 0.5% of reserves (up to $500 million) in insured deposits. The OCC is also evaluating broader deposit-placement requirements to mitigate potential deposit flight from the banking system — an issue framed explicitly as a policy concern.

Capital and Operational Liquidity Framework

Rather than imposing standardized bank capital ratios, the OCC would set capital requirements individually for each issuer, with a minimum floor of $5 million and a de novo capital plan typically covering three years. Only common equity tier 1 and additional tier 1 capital would qualify; Tier 2 instruments such as subordinated debt would be excluded. Accumulated Other Comprehensive Income must be included in CET1.

The OCC is considering issuance-based capital charges and risk-based add-ons, including potential charges for uninsured deposits. These alternatives could materially increase required equity capital, particularly for larger issuers.

Separately, the proposal introduces an operational liquidity backstop requiring highly liquid assets equal to 12 months of operating expenses. This mirrors the OCC’s approach to national trust banks and reflects a conservative supervisory posture.

Supervision and Risk Management

PPSIs would be subject to regular full-scope examinations, generally at least annually. The OCC adopts a principles-based approach to operational, compliance, and information technology risk management, drawing from existing safety-and-soundness and crypto custody guidance. The framework is intended to scale based on size and complexity. There are no explicit growth caps, but supervisory expectations are tied to an issuer’s ability to manage risk appropriately.

State Issuer Transition Requirements

Under the GENIUS Act, a state-regulated nonbank issuer exceeding $10 billion in outstanding stablecoins must transition to OCC oversight within 360 days, obtain a waiver, or cease net new issuance. The Proposed Rule adds specific procedural deadlines, including prompt notification to the OCC and completion of a capital analysis. The “cease issuance” requirement applies on a net basis, allowing technical blockchain migrations so long as total outstanding value does not increase.

Strategic Implications for Credit Unions

The OCC’s proposal formalizes stablecoin issuance within a bank-like prudential regime and signals that stablecoins are being integrated into the federally supervised financial system rather than treated as peripheral fintech products. Capital calibration, reserve diversification rules, and potential deposit-placement mandates will shape whether the sector is dominated by large institutions or accessible to smaller entrants.

For credit unions, the key takeaway is structural: while the NCUA PPSI NPRM addresses how credit unions may participate in stablecoin activity, the OCC proposal defines the regulatory conditions under which federally supervised stablecoin competitors will operate. Engagement in the comment process — particularly on proportionality, reserve placement, and competitive neutrality — will be important to ensure that the evolving framework does not create unintended distortions in the broader payments ecosystem.

Posted in Advocacy on the Move, Regulatory Advocacy.