[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 [www.gpo.gov]
[FR Doc No: 2026-04089]
[[Page 10201]]
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
[[Page 10202]]
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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:
Federal eRulemaking Portal--Regulations.gov:
Go to https://regulations.gov/. 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 Regulations.gov site, please call
1-866-498-2945 (toll free) Monday-Friday, 9 a.m.-5 p.m. ET, or email
[email protected].
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.
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 Regulations.gov 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:
Viewing Comments Electronically--Regulations.gov: Go to
https://regulations.gov/. 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 Regulations.gov site, please call 1-866-498-2945
(toll free) Monday-Friday, 9 a.m.-5 p.m. ET, or email
[email protected].
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], https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf. 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
[[Page 10203]]
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)).
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\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).
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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.
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\26\ See discussion of the definition of ``GAAP,'' infra.
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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.
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\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'').
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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.
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\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.
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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.
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\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\
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\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\
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\37\ Sharding refers to dividing a private key into distinct
pieces for enhanced security.
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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\
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\38\ As noted above, the term ``distributed ledger'' is limited
to publicly available and accessible ledgers.
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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\
---------------------------------------------------------------------------
\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.''
---------------------------------------------------------------------------
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).
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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.
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\43\ See OCC Interpretive Letter 1186 (November 18, 2025).
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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).
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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.
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\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).
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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), https://www.cnbc.com/2025/10/16/paypals-crypto-partner-mints-300-trillion-stablecoins-in-technical-error.html (describing a technical error leading to the minting of a
large amount of new stablecoins).
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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.
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\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.
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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.
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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.
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\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.
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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).
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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.
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\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).
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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.
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\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), 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.
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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,'' https://fred.stlouisfed.org/data/WTB3MS (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), https://www.occ.gov/news-issuances/news-releases/2025/nr-ia-2025-68.html.
\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.
---------------------------------------------------------------------------
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 www.occ.gov. 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 www.occ.gov. 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 stablecoin issuer's operations and the
risks unique to its business model. This regular data reporting will
allow the OCC to tailor its examinations to be risk-based, which will
reduce the burden of examinations by focusing the scope of
examinations. Further, the OCC believes that this regular reporting
framework will allow the OCC to identify and respond more quickly to
emerging novel and financial stability risks. The OCC also believes the
information requests is currently tracked on a regular basis by
stablecoin issuers.
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\75\ With regards to reporting by a permitted payment stablecoin
issuer as to its assets under custody, section 10(d) of the GENIUS
Act (12 U.S.C. 5909(d)) provides an additional statutory grant of
authority.
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The OCC is proposing in Sec. 15.14(i) a separate provision that
requires permitted payment stablecoin issuers to submit quarterly
reports of financial condition to the OCC, including, but not limited
to income statement, expenses, balance sheet, reserves, changes in
equity, investments, capital, outstanding issuance value, and assets
under custody, in a standardized format as prescribed by the OCC within
30 days of the end of the prior quarter. The OCC proposes this
provision to ensure that permitted payment stablecoin issuers produce
regular, standardized statements of financial condition to the OCC and
will include additional information beyond the composition report
required under Sec. 15.11(e) and the confidential weekly reporting
required under proposed Sec. 15.14(h), including information regarding
the permitted payment stablecoin issuer's income, expenses, balance
sheet, reserves,
[[Page 10226]]
changes in equity, investments, capital, outstanding issuance value,
and assets under custody. This provision mirrors the quarterly
statements of financial condition that national banks and Federal
savings associations provide to the Federal banking agencies through
their quarterly Consolidated Reports of Condition and Income filings,
commonly referred to as Call Reports.\76\ The information required to
be reported under this section will be streamlined substantially
relative to the Call Reports, in light of the comparatively simple
business model of a permitted payment stablecoin issuer. Standardizing
these reporting requirements will enhance the OCC's ability to
supervise permitted payment stablecoin issuers and provide clarity as
to the information a permitted payment stablecoin issuer must report.
The OCC intends to publish the information provided in the quarterly
report to ensure transparency and that the public has an understanding
of a permitted payment stablecoin issuer's financial condition on an
ongoing basis. The OCC also proposes to require that each quarterly
report of financial condition includes a declaration from the permitted
payment stablecoin issuer's Chief Financial Officer, or the individual
performing an equivalent function, that the report is true and correct
to the best of their knowledge and belief. The correctness of the
quarterly report of condition shall also be attested to by the
signatures of the directors and senior management of the permitted
payment stablecoin issuer other than the officer making such
declaration, with the attestation stating that the report has been
examined by them and to the best of their knowledge and belief is true
and correct. The OCC proposes requiring these declarations and
attestations to ensure that permitted payment stablecoin issuer's
officers and directors are accountable for the accuracy of the
permitted payment stablecoin issuer's reports of financial condition.
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\76\ See 12 U.S.C. 161(a) (requiring national banks to make
reports of condition to the OCC); and 12 U.S.C. 1464(v) (requiring
Federal savings associations to make reports of condition to the
OCC).
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Proposed Sec. 15.14(k) implements section 5(i) of the GENIUS Act
(12 U.S.C. 5904(i)). Consistent with the statute, under the proposed
rule, not later than 180 days after the approval of an application, as
defined in proposed Sec. 15.30, and on an annual basis thereafter, a
permitted payment stablecoin issuer must submit to the OCC a
certification by its board of directors that the permitted payment
stablecoin issuer has implemented anti-money laundering and economic
sanctions compliance programs that are reasonably designed to prevent
the permitted payment stablecoin issuer from facilitating money
laundering, in particular, facilitating money laundering for cartels
and organizations designated as foreign terrorist organizations under
section 219 of the Immigration and Nationality Act (8 U.S.C. 1189) and
the financing of terrorist activities, consistent with the requirements
of the GENIUS Act.
Audits
Section 4(a)(10) of the GENIUS Act (12 U.S.C. 5903(a)(10)) requires
that a permitted payment stablecoin issuer with more than $50 billion
in consolidated total outstanding issuance value that is not subject to
certain reporting requirements under Federal securities laws prepare an
annual financial statement. Section 4(a)(10) further provides that a
registered public accounting firm must perform an audit of the annual
financial statement. The audited annual financial statement must be
made publicly available on the permitted payment stablecoin issuer's
website and be submitted annually to the primary Federal payment
stablecoin regulator.
Proposed Sec. 15.14(l) implements the requirements of section
4(a)(10) of the GENIUS Act. Under the proposed rule, each permitted
payment stablecoin issuer with more than $50 billion in outstanding
issuance value that is not subject to the reporting requirements under
section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15
U.S.C. 78m(a) or 78o(d)) \77\ must prepare, in accordance with GAAP, an
annual financial statement that must include the disclosure of any
related party transactions, as defined by GAAP. Proposed Sec.
15.14(l)(1) requires that a registered public accounting firm must
conduct an audit of the financial statements in accordance with all
applicable auditing standards established by the Public Company
Accounting Oversight Board. The OCC interprets ``applicable auditing
standards'' under section 4(a)(10)(A)(iii) of the GENIUS Act (12 U.S.C.
5903(a)(10)(A)(iii)) to mean those that would apply if the permitted
payment stablecoin issuer were subject to the reporting requirements
under section 13(a) or 15(d) of the Securities and Exchange Act of 1934
(15 U.S.C. 78m or 78o(d)). The standards would be enforced by the OCC
for permitted payment stablecoin issuers subject to the audit
requirement under section 4(a)(10)(A)(iii) of the GENIUS Act (12 U.S.C.
5903(a)(10)(A)(iii)). Consistent with this framework, the OCC may at
any time request that a registered public accounting firm provide to
the OCC certain additional information or documents relating to
information provided by the permitted payment stablecoin issuer. The
registered public accounting firm must agree to provide copies of any
working papers, policies, and procedures relating to services in
connection with the audit required under section 4(a)(10)(A)(iii) of
the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(iii)). Proposed Sec.
15.14(l)(2) requires the permitted payment stablecoin issuer to: (1)
make the audited financial statement publicly available on its website,
and (2) submit the audited financial statement annually to the OCC.
Under proposed Sec. 15.14(l)(2)(ii), a permitted payment stablecoin
issuer would be required to submit to the OCC annually, within 120 days
of the end of its fiscal year, an audited financial statement. If a
permitted payment stablecoin issuer is unable to timely file all or any
portion of its financial statements, proposed Sec. 15.14(l)(2)(iii)
would require the permitted payment stablecoin issuer to submit a
written notice of late filing to the OCC that would: (A) disclose the
permitted payment stablecoin issuer's inability to file all, or
specified portions, of its annual financial statement and the reasons
therefore in reasonable detail; (B) include the date by which the
financial statement will be filed; and (C) be filed on or before the
deadline for filing the financial statement.
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\77\ This requirement would not apply to an entity whose parent
company is a reporting entity to the extent that the information of
the entity would be reflected in applicable reports.
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Proposed Sec. 15.14(m) would address changes in control of a
permitted payment stablecoin issuer. Proposed Sec. 15.14(m)(1) would
require a person seeking to acquire control, as those terms are used at
12 CFR 5.50, of a permitted payment stablecoin issuer to follow the
requirements of 12 CFR 5.50 as if the permitted payment stablecoin
issuer were a national bank. Thus, consistent with 12 CFR 5.50, a
person seeking to acquire control (as those terms are used in 12 CFR
5.50) would need to provide 60 days prior notice to the OCC, except in
certain circumstances identified in 12 CFR 5.50.\78\ The OCC could
inform the filer that the acquisition has been disapproved, has not
been disapproved,
[[Page 10227]]
or that the review period has been extended.\79\
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\78\ See 12 CFR 5.50(b).
\79\ See 12 CFR 5.50(f).
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To avoid duplication, proposed Sec. 15.14(m)(2) would provide that
the requirements of paragraph (m)(1) do not apply to a transaction
subject to the notice or application provisions under 12 CFR part 5 or
Sec. 15.30.
The OCC is considering including additional provisions detailing
the consequences of failing to follow the procedures under 12 CFR 5.50.
For example, the OCC is considering including language stating that, if
a person acquires control, as the term is used at 12 CFR 5.50, of a
permitted payment stablecoin issuer without following the requirements
of 12 CFR 5.50 as if the permitted payment stablecoin issuer were a
national bank before the time for the OCC's review as provided in 12
CFR 5.50 has expired or after the OCC has disapproved the acquisition
of control, the permitted payment stablecoin issuer: (i) must, within
15 calendar days of the acquisition of control, provide all information
required under 12 CFR 5.50; and (ii) may be subject to supervisory or
enforcement actions relating to any concerns arising from the change in
control, consistent with applicable law. The OCC welcomes any comments
related to proposed Sec. 15.14(m) as well as the additional language
the OCC is considering including in proposed Sec. 5.14(m).
The OCC proposes requiring this notice to facilitate the OCC's
ongoing examination and supervision of permitted payment stablecoin
issuers. Requiring notice of changes in control will assist the OCC in
carrying out its mandate to examine permitted payment stablecoin
issuers and is consistent with the OCC's authority to supervise,
request reports, and conduct examinations pursuant to section 6(a) of
the GENIUS Act (12 U.S.C. 5905(a)). In addition, requiring notice
regarding changes in control will help the OCC monitor for and address
evasion of the requirements of the GENIUS Act. For example, there may
be instances where changes in control implicate the risk management
requirements of the GENIUS Act, Bank Secrecy Act/Anti-Money Laundering
(BSA/AML) or sanctions evasion. Similarly, section 5(c) of the GENIUS
Act (12 U.S.C. 5904(c)) includes requirements designed to prevent an
individual that has been convicted of a felony offense involving
insider trading, embezzlement, cybercrime, money laundering, financing
of terrorism, or financial fraud from serving as an officer or director
for an applicant. The same section of the GENIUS Act includes
provisions addressing the competence, experience, integrity of the
officers, directors, and principal shareholders of the applicant.
Absent a requirement to submit a notice regarding a change in control,
an applicant could become licensed with a set of officers, directors,
and principal shareholders that do not raise concerns under section
5(c) of the GENIUS Act (12 U.S.C. 5904(c)) and then transfer control to
persons that do implicate concerns under section 5(c) of the Act or
that otherwise raise concerns regarding the ability of the permitted
payment stablecoin issuer to comply with the Act and its implementing
regulations.
Proposed Sec. 15.14(n) and (o) implement the requirements of
section 6(a)(4)(A) and (B) of the GENIUS Act (12 U.S.C. 5905(a)(4)(A)
and (B)) by mirroring the statutory requirements that, as a part of its
supervision and examination of permitted payment stablecoin issuers,
the OCC, to the fullest extent possible, will use existing supervisory
reports and other supervisory information and avoid duplication of
examination activities, reporting requirements, and requests for
information. The OCC will follow this approach, including in developing
and issuing related examination handbooks and policies. The OCC
believes this is the optimal approach because it will allow the OCC to
quickly adapt and fine-tune its supervisory and examination policies to
maximize both efficiency and burden reduction. This approach is also
consistent with the approach that the OCC takes for other entities
under its jurisdiction.
6. State Qualified Payment Stablecoin Issuers (Proposed Sec. 15.15)
The OCC proposes to issue Sec. 15.15 to implement the GENIUS Act's
transition standards for State qualified payment stablecoin issuers
with an outstanding issuance value of more than $10 billion.
Specifically, proposed Sec. 15.15 would require an issuer to notify
the OCC within five calendar days after the issuer triggers the
transition threshold, request a waiver if the issuer seeks to remain
supervised solely by the applicable State regulator, and, if
applicable, provide the OCC with information necessary to evaluate an
associated waiver request. Proposed Sec. 15.15 would also establish a
timeframe for the OCC's review of an issuer's waiver request. Proposed
Sec. 15.15(a) describes the scope of Sec. 15.15 and provide that the
section addresses requirements related to a State qualified payment
stablecoin issuer that is a nonbank entity transitioning to the OCC's
regulatory framework pursuant to section 4 of the GENIUS Act (12 U.S.C.
5903).
a. Transition to Federal Oversight
Section 4(d) of the GENIUS Act (12 U.S.C. 5903(d)) addresses the
transition of State qualified payment stablecoin issuers that are not
State chartered depository institutions to Federal oversight and
provides the OCC with authority to supervise such issuers jointly with
the relevant State payment stablecoin regulator.\80\ Proposed Sec.
15.15(b)(1) would implement section 4(d)(2) of the GENIUS Act (12
U.S.C. 5903(d)(2)) and would require a State qualified payment
stablecoin issuer that is a nonbank entity that crosses the $10 billion
outstanding issuance threshold to transition to the Federal regulatory
framework under proposed part 15 and to comply with the provisions of
part 15 applicable to Federal qualified payment stablecoin issuers
within 360 days or cease issuing, on a net basis, new payment
stablecoins until the State qualified payment stablecoin issuer's
outstanding issuance value is under the $10 billion threshold. The OCC
proposes to clarify that the State qualified payment stablecoin issuer
would cease issuing new payment stablecoins on a net basis. This is to
permit a State qualified payment stablecoin issuer to freeze, burn,
mint and issue new payment stablecoins to the extent necessary to
transfer stablecoins from one blockchain to another without increasing
the total outstanding issuance of the State qualified payment
stablecoin issuer.
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\80\ Section 4(d)(2) of the GENIUS Act (12 U.S.C. 5903(d)(2))
refers to State qualified payment stablecoin issuers other than
State chartered depository institutions (addressed in section
4(d)(1) of the Act). For simplicity, proposed Sec. 15.15 refers to
State qualified payment stablecoin issuers that are nonbank
entities. Nonbank entity is defined by the Act to mean a person that
is not a depository institution or a subsidiary of a depository
institution. 12 U.S.C. 5901(20).
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Section 4(h) of the GENIUS Act (12 U.S.C. 5903(h)) authorizes the
OCC to issue regulations necessary to administer and carry out the
GENIUS Act's requirements and prevent evasion thereof. To facilitate an
orderly transition to Federal oversight, ensure compliance with the
GENIUS Act's transition requirements, and manage agency resources,
proposed Sec. 15.15(b)(2)(i) would require a nonbank State qualified
payment stablecoin issuer of a payment stablecoin with an outstanding
issuance value of more than $10 billion to provide written notification
to the OCC within five calendar days after reaching such
[[Page 10228]]
threshold.\81\ Proposed Sec. 15.15(b)(2)(ii) provides that the written
notification must include the following information: the State or
States that currently regulate the State qualified payment stablecoin
issuer; the State qualified payment stablecoin issuer's outstanding
issuance value as of the date of the notice; the date that the issuer
reached the $10 billion outstanding issuance value threshold; and
indication of whether and when the issuer has ceased issuing, on a net
basis, new payment stablecoins and whether the issuer intends to seek a
waiver from transitioning to the Federal regulatory framework. Proposed
Sec. 15.15(b)(4) provides clarity as to when a State qualified payment
stablecoin issuer transitions to the Federal regulatory framework.
Proposed Sec. 15.15(b)(4)(i) would require a State qualified payment
stablecoin issuer to provide notification to the OCC that it is in
compliance with the Federal regulatory framework implemented under
proposed part 15. If the State qualified payment stablecoin issuer is
not in compliance with the Federal regulatory framework in proposed
part 15, the written notice would need to identify the provisions that
the issuer does not comply with, provide the issuer's plan for
remediating its noncompliance, and explain why the issuer did not
comply with the Federal regulatory framework within the 360-day
transition period. Regardless of whether the OCC receives such notice,
the OCC reserves the right to pursue appropriate action to ensure
compliance with the GENIUS Act with respect to a State qualified
payment stablecoin issuer that transitions to the Federal regulatory
framework administered by the OCC. Under proposed Sec.
15.15(b)(4)(ii), a State qualified payment stablecoin issuer that does
not cease issuing new payment stablecoins must transition to the
Federal regulatory framework on the earlier of 360 days after reaching
the $10 billion outstanding issuance value threshold or the date on
which the State qualified payment stablecoin issuer provides written
notification under paragraph (b)(4)(i).
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\81\ The proposal would require a nonbank State qualified
payment stablecoin issuer to provide written notification to the
OCC, regardless of whether it intends to issue new payment
stablecoins.
---------------------------------------------------------------------------
To facilitate an orderly transition process, proposed Sec.
15.15(b)(3)(i) would require a State qualified payment stablecoin
issuer that is a nonbank entity to submit an analysis of the issuer's
current capital position and anticipated capital needs, sufficient to
ensure ongoing operations, based on its business model and risk profile
to the OCC within 270 days of reaching the $10 billion outstanding
issuance value threshold. State qualified payment stablecoin issuers
are encouraged to submit a plan promptly to provide ample time to raise
additional capital before transitioning to the OCC's regulatory
framework, if needed. Under the proposed capital regulations in Sec.
15.41, de novo banks, including transitioning State qualified payment
stablecoin issuers, must maintain initial capital based on conditions
set by the OCC during the licensing, chartering, or transition stage.
Accordingly, proposed Sec. 15.15(b)(3)(ii) would provide that the OCC
will review the submitted analysis and establish a minimum capital
requirement pursuant to proposed Sec. 15.41(a)(1). Proposed Sec.
15.15(b)(3)(iii) would provide that for purposes of complying with the
transition requirements under proposed Sec. 15.15(b)(1)(i) of this
section, the issuer must hold minimum capital as specified under Sec.
15.41(a)(1)(ii) prior to the issuer's transition date. State qualified
payment stablecoin issuers that seek to transition early are therefore
encouraged to submit their capital analysis to the OCC early, to ensure
adequate time to address any deficiencies. Proposed Sec.
15.15(b)(1)(iv) would provide that a State qualified payment stablecoin
issuer would not need to submit an analysis of its capital if it
receives a waiver under proposed Sec. 15.15(d) or is not required to
transition to the OCC's Federal regulatory framework under Sec.
15.15(b)(1)(ii). As discussed above, a State qualified payment
stablecoin issuer that seeks to transition to the Federal regulatory
framework before the end of the 360-day period must certify its
compliance with the part 15, which include capital requirements.
Under Sec. 15.15(c), the OCC is proposing to require that a State
qualified payment stablecoin issuer that transitions to the regulatory
framework under proposed part 15 must undergo an initial examination at
the OCC's request or no later than six months after the date on which
the State qualified payment stablecoin issuer provides written
notification under proposed Sec. 15.15(b)(4)(i). Because a State
qualified payment stablecoin issuer that transitions to the Federal
framework will already be in operation, the OCC intends to conduct this
examination well before the six-month outer limit proposed to ensure
that the issuer can effectively operate under the Federal framework.
b. Waiver From Federal Supervision
Notwithstanding the transition requirements discussed above, under
section 4(d)(3) of the GENIUS Act (12 U.S.C. 5903(d)(3)), the OCC may
permit a nonbank State qualified payment stablecoin issuer that reaches
the $10 billion threshold to remain solely supervised by a State
payment stablecoin regulator. In determining whether to issue a waiver
from Federal supervision, proposed Sec. 15.15(d)(2) implements the
requirement in the statute that provides that the OCC must consider
four exclusive criteria: the capital maintained by the State qualified
payment stablecoin issuer; the past operations and examination history
of the State qualified payment stablecoin issuer; the experience of the
State qualified payment stablecoin regulator in supervising payment
stablecoin and digital asset activities; and the supervisory framework,
including regulations and guidance, of the State qualified payment
stablecoin issuer with respect to payment stablecoins and digital
assets.
To facilitate an orderly waiver process, proposed Sec. 15.15(d)(1)
would require a State qualified payment stablecoin issuer seeking a
waiver to submit a written waiver request to the OCC within 240 days of
reaching the $10 billion outstanding issuance value threshold.\82\
Nothing would prohibit a State qualified payment stablecoin issuer that
exceeds the $10 billion threshold from seeking a waiver earlier, and
the OCC would recommend that issuers that intend to seek a waiver do so
promptly. The request must include information necessary for the OCC to
evaluate the waiver criteria enumerated in proposed Sec. 15.15(d)(2)
and (3), discussed below. For example, such information may include the
State qualified payment stablecoin issuer's reports of condition and
examination, financial statements, investor statements, reports that
detail significant examination findings, business activities, existence
of past or current enforcement orders, and disclosure of any violations
of law, as well as other information as requested by the OCC.
Additionally, the waiver request may describe whether the State payment
stablecoin regulator has experience regulating entities that have a
similar risk profile. The waiver request may also include information
regarding the frequency and depth of the State payment stablecoin
regulator's examinations. The OCC will review the
[[Page 10229]]
issuer's waiver request and any associated information in relation to
the waiver criteria.
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\82\ The OCC may also issue a waiver of its own accord, provided
that it has information sufficient to evaluate the statutory
criteria for issuing waivers.
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Additionally, proposed Sec. 15.15(d)(3) would incorporate waiver
presumption standards for a State qualified payment stablecoin issuer
that submits a waiver request. Consistent with section 4(d)(3)(C) of
the Act (12 U.S.C. 5903(d)(3)(C)), the OCC will presumptively approve a
waiver request if the relevant State payment stablecoin regulator has
(1) established a prudential regulatory regime for the supervision of
digital assets or payment stablecoins as of April 19, 2025 that has
been certified pursuant to section 4(c) of the Act (12 U.S.C. 5903(c))
and (2) approved one or more issuers to issue payment stablecoins under
the supervision of such State payment stablecoin regulator. The waiver
presumption is lost if the OCC finds, by clear and convincing evidence,
that the State qualified payment stablecoin issuer does not
substantially meet the waiver criteria in proposed Sec. 15.15(d)(2) or
that the issuer poses significant safety and soundness risks to the
financial system of the United States. If an issuer believes it
qualifies for the waiver presumption, it must indicate so in the waiver
request and provide information sufficient for the OCC to evaluate the
waiver presumption standards.
7. Unusual and Exigent Circumstances (Proposed Sec. 15.16)
The OCC proposes to issue Sec. 15.16 to clarify the scope of the
agency's enforcement authority over nonbank State qualified payment
stablecoin issuers during unusual and exigent circumstances, including
the review of OCC enforcement actions imposed pursuant to this
authority.\83\ Proposed Sec. 15.16(a) would address the scope of Sec.
15.16 and provide that the section addresses the OCC's authority to
impose restrictions on a State qualified payment stablecoin issuer that
is a nonbank entity during unusual and exigent circumstances, pursuant
to section 7 of the GENIUS Act (12 U.S.C. 5906).
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\83\ Proposed Sec. 15.16 would address ``unusual and exigent
circumstances'' only for purposes of section 7(e)(2) of the GENIUS
Act (12 U.S.C. 5906(e)(2)); it would not interpret the meaning of
that term under any other statute.
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Section 7(e)(2)(B) of the GENIUS Act (12 U.S.C. 5906(e)(2)(B))
requires the OCC to issue rules to set forth the unusual and exigent
circumstances in which the OCC would exercise its enforcement authority
against nonbank State qualified payment stablecoin issuers. Section
7(e)(2) of the GENIUS Act provides that, during ``unusual and exigent
circumstances,'' the OCC must take an enforcement action against a
State qualified payment stablecoin issuer that is a nonbank entity for
violations of the GENIUS Act, provided that the agency makes two
determinations.\84\ First, under the Act, the OCC must determine that
``unusual and exigent circumstances'' exist. Second, under the Act, the
OCC must determine that there is reasonable cause to believe that the
continuation of any activity by an issuer constitutes a serious risk to
the financial safety, soundness, or stability of the issuer. Under the
Act, if the OCC determines that both conditions are met, the OCC must
impose such restrictions as the OCC determines to be necessary to
address the serious risks to the issuer during the unusual and exigent
circumstances. For example, under the Act, the OCC can limit a nonbank
State qualified payment stablecoin issuer's affiliate transactions. The
OCC may also limit nonbank State qualified payment stablecoin issuer
activities that might create a serious risk that the liabilities of the
issuer's holding company and its affiliates will be imposed on the
issuer. The restrictions must be issued in the form of a directive,
with the effect of a cease-and-desist order that has become final, to
the nonbank State qualified payment stablecoin issuer and any of its
affiliates.
---------------------------------------------------------------------------
\84\ The GENIUS Act does not impose these limitations on the
enforcement authority of State payment stablecoin regulators. See 12
U.S.C. 5906(a).
---------------------------------------------------------------------------
Proposed Sec. 15.16(b) would incorporate the GENIUS Act's unusual
and exigent circumstances requirement. Under proposed Sec. 15.16(b),
if the OCC determines that unusual and exigent circumstances exist,
based on the information available to the OCC, and that there is
reasonable cause to believe that the continuation of any activity,
including failure to act,\85\ by a State qualified payment stablecoin
issuer that is a nonbank entity constitutes a serious risk to the
financial safety, soundness, or stability of the nonbank entity, the
OCC will impose such restrictions as the OCC determines to be necessary
to address such risk in the form of a directive. The Act provides three
examples of the limitations that the OCC may impose, which are
incorporated into proposed Sec. 15.16(b). Such restrictions may
include limitations on: (1) redemptions of payment stablecoins; (2)
transactions between the State qualified payment stablecoin issuer, a
holding company, and the subsidiaries or affiliates of either the State
qualified payment stablecoin issuer or the holding company; and (3) any
activities of the State qualified payment stablecoin issuer that might
create a serious risk that the liabilities of a holding company and the
affiliates of the holding company may be imposed on the State qualified
payment stablecoin issuer.
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\85\ Proposed Sec. 15.16(b) would clarify that failure to act
also constitutes the continuation of an activity, as contemplated by
section 7(e)(2)(C) of the GENIUS Act (12 U.S.C. 5906(e)(2)(C)).
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Proposed Sec. 15.16(c) would set forth the criteria the OCC would
consider when determining whether unusual and exigent circumstances
exist. Specifically, under the proposed rule, the OCC would consider:
(1) whether the State qualified payment stablecoin issuer is, or is
expected to imminently be, engaging in an activity (including any act,
practice, or omission) that poses an immediate risk to the financial
safety, soundness, or stability of the issuer or the financial system
of the United States; (2) the actions of the relevant State payment
stablecoin regulator to promptly address the risk to the issuer or the
financial system of the United States; (3) risks presented to payment
stablecoin holders; and (4) any other factors the OCC deems appropriate
in light of the particular circumstances, consistent with the purposes
of the GENIUS Act.
The OCC's proposed criteria are intended to capture circumstances
that involve an immediate financial risk that cannot be sufficiently
addressed through normal supervisory channels. Accordingly, the OCC's
proposed criteria focus on the immediacy of the financial risks,
whether to the issuer, the stablecoin holders, or the financial system,
and the actions of relevant State payment stablecoin regulator to
respond to those risks. The OCC has preliminarily determined that
adopting flexible criteria focused on these considerations, as opposed
to a limited set of specific circumstances, would establish an
appropriate balance between providing stakeholders with clarity on when
the OCC would act pursuant to this authority while implementing the
GENIUS Act's clear intention to permit the OCC to respond to evolving
and unforeseeable circumstances.
Finally, proposed Sec. 15.16(d) clarifies that the administrative
review procedures described in section 7(e)(2)(D) of the Act (12 U.S.C.
5906(e)(2)(D)) are applicable to a State qualified payment stablecoin
issuer or any institution-affiliated party subject to an unusual and
exigent circumstances directive.
[[Page 10230]]
C. Subpart C--Custody
Section 10 of the GENIUS Act (12 U.S.C. 5909) imposes requirements
on any person seeking to provide custodial or safekeeping services for
payment stablecoin reserves, payment stablecoins used as collateral, or
the private keys used to issue payment stablecoins. Among other things,
section 10 of the Act requires such persons to be subject to
supervision or regulation by a Federal or State supervisor, to treat
covered assets as customer property, to separately account for and not
commingle covered assets unless permitted under a listed exception, and
to provide their supervisor with certain regulatory information as
determined by that supervisor. Section 10 also provides claims of
payment stablecoin holders priority over other claims on persons
providing custody and exempts certain persons providing hardware or
software services from the requirements of section 10.
The proposal would (1) establish relevant defined terms for
purposes of subpart C to clarify the scope of custodial services to
which subpart C would apply; (2) set minimum principles-based
requirements for OCC-supervised institutions related to their provision
of custodial or safekeeping services to the assets described in Section
10 of the GENIUS Act that are appropriate to protect such custodied
assets from the claims of creditors of the institution; and (3)
implement other requirements and exclusions of the Act.
1. Definitions (Proposed Sec. 15.20)
The OCC is proposing to define the assets for which the provision
of custodial or safekeeping services trigger the requirements of the
Act as ``covered assets.'' This term would include the assets described
in section 10(a) of the GENIUS Act (12 U.S.C. 5909(a)) that comprise
the payment stablecoin reserves (discussed above), any payment
stablecoin used as collateral, and the private keys used to issue
payment stablecoins.
The OCC is also proposing to include in the definition of covered
assets any cash or other property of a permitted payment stablecoin
issuer, as defined in the GENIUS Act, received by the custodian in the
course of provision of custodial or safekeeping services contemplated
under the GENIUS Act. Sections 10(b) and (c) of the GENIUS Act (12
U.S.C. 5909(b) and (c)) each apply the Act's custodial requirements not
only to the custody of payment stablecoin reserves, payment stablecoins
used as collateral, and the private keys used to issue payment
stablecoins but also to ``cash[ ] and other property'' of a custody
customer of one of those assets.
``Cash and other property,'' as used in section 10 of the GENIUS
Act, appears to refer to cash and other property that a covered
custodian (defined and discussed below) may receive as custodial
property of its customers, but only to the extent such cash or other
property is received in connection with the provision of custodial
services for payment stablecoin reserves, payment stablecoins used as
collateral, and the private keys used to issue payment stablecoins. For
example, any interest on payment stablecoin reserve assets held in
custody in a deposit account and credited to a customer's (i.e., a
permitted payment stablecoin issuer) account would be the type of cash
and other property subject to the custody requirements of the Act.
Thus, under the proposed rule, ``covered assets'' would mean
payment stablecoin reserves, payment stablecoins used as collateral,
and private keys used to issue payment stablecoins, as well as cash and
other property received in the course of the provision of custodial or
safekeeping services for such assets.
Separately, the OCC is proposing to define the entities to which
the proposed custody requirements would apply as ``covered
custodians.'' This term would mean a national bank, Federal savings
association, Federal branch, or permitted payment stablecoin issuer to
the extent of such person's provision of custodial or safekeeping
services to covered customers (as such term is described below) for
covered assets.
The OCC is proposing to define the custodial customers to which the
GENIUS Act's protections apply as ``covered customers.'' This term
would mean a person for or on whose behalf a covered custodian
receives, acquires, or holds covered assets.
The OCC is also proposing to define certain other concepts relative
to covered asset custodial activities. The proposal would define
``applicable law'' for purposes of subpart C as the law of a State or
other jurisdiction governing a covered custodian's custody
relationships, any applicable Federal law governing those
relationships, the terms of the custody agreement, and any applicable
court order. The proposal would define ``custody agreement'' as a
legally binding contractual agreement between a covered customer, as
the principal, and the custodian, as the agent, that establishes the
custodian's duties and responsibilities in providing safekeeping and
ancillary services to the covered customer. The proposal would define
``digital wallet'' as a software program or hardware device that stores
and manages the private keys associated with a particular unit of a
digital asset. The proposal would define ``sub-custodian'' as a person
that provides custody and safekeeping services to a covered custodian,
including through a digital wallet for which such person controls the
associated private keys, with respect to the covered assets of a
covered customer for which the covered custodian otherwise serves as a
custodian under this subpart.\86\
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\86\ A sub-custodian would be subject to the requirements
applicable to a custodian under the GENIUS Act, including the
requirements under section 10 of the Act (12 U.S.C. 5909).
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2. Covered Asset Custodial Property Requirements (Proposed Sec. 15.21)
Proposed Sec. 15.21 would implement certain minimum principles-
based requirements applicable to a covered custodian's provision of
custodial and safekeeping services for covered assets to ensure that
such covered assets are treated and dealt with as belonging to the
covered customers and protected from claims of the covered custodian's
creditors, as well as the creditors of any sub-custodian, as
applicable, or the claims of any customer's creditors. Under proposed
Sec. 15.21(a), a covered custodian must separately account for the
covered assets of each covered customer and must treat and deal with
those covered assets as belonging to such covered customer and not as
the property of the covered custodian. Under proposed Sec. 15.21(b), a
covered custodian must take appropriate steps to protect the covered
assets of covered customers from the claims of creditors of the covered
custodian and any sub-custodian, as applicable, including through
adopting, implementing, and maintaining written policies, procedures,
and internal controls that are adequate to comply with applicable law
and that are commensurate with the covered custodian's size,
complexity, and risk profile and with the nature of the applicable
covered assets for which it provides custodial or safekeeping services.
The OCC believes that setting certain minimum principles-based
requirements for the provision of these custody services, regardless of
the use of omnibus accounts, is consistent with section 10(b)(2) of the
GENIUS Act (12 U.S.C. 5909(b)(2)), which requires that applicable
custodians ``take such steps as are appropriate to protect the [covered
assets] of a customer from the claims of creditors of the [custodian]''
and section 13 of the GENIUS Act (12 U.S.C. 5913), which grants the OCC
[[Page 10231]]
broad rulemaking authority to implement the GENIUS Act. In considering
minimum, principles-based requirements, the OCC is proposing to require
covered custodians to take such steps that the OCC would typically
expect a supervised institution to take as part of sound custodial
practices necessary to protect custodied assets from claims of the
custodian's creditors.\87\
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\87\ To the extent that a covered custodian, as an accommodation
to a covered customer, documents in an account statement or other
similar document any additional assets of that customer for which
the covered custodian does not provide custodial or safekeeping
services, including through use of a sub-custodian of the covered
custodian (commonly referred to as ``accommodation assets'' or
``below the line assets''), the OCC would not expect such assets to
be subject to the requirements of subpart C.
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The OCC is also proposing in Sec. 15.21(b) to require that a
covered custodian maintain possession or control of covered assets of a
covered customer that are held directly, including in a digital wallet
for which the covered custodian controls the associated private keys.
Under the proposal, a covered custodian may maintain the covered assets
of a covered customer through the use of a sub-custodian if consistent
with applicable law, provided the covered custodian maintains adequate
safeguards and internal controls reasonably designed to provide the
covered custodian with oversight of such sub-custodian's compliance
with the requirements of this proposed subpart C. Under the proposal,
with regards to any payment stablecoin or stablecoin reserve in the
form of a tokenized asset held in safekeeping under proposed subpart C,
a covered custodian, or sub-custodian, as applicable, maintains control
for purposes of the proposed requirement if it can reasonably
demonstrate, consistent with the standard of care established by
applicable law, that no other party, including the covered customer,
can transfer the payment stablecoin or tokenized asset using a
distributed ledger without the consent of the custodian or sub-
custodian, as applicable. This requirement is consistent with past OCC
guidance on the control of crypto-assets for purposes of
safekeeping.\88\
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\88\ See OCC, ``Agencies Issue Joint Statement on Risk-
Management Considerations For Crypto-Asset Safekeeping.''
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The OCC intends these principles-based, minimum requirements to be
in line with sound custodial management practices that the agency
understands are industry standard. A national bank or Federal savings
association that is a covered custodian and that acts in a fiduciary
capacity must comply with 12 CFR part 9 or 150, as applicable. In
addition, certain State laws concerning fiduciary activities may
apply.\89\
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\89\ See 12 CFR 9.2(b) (defining ``applicable law'' to include
the law of a state or other jurisdiction governing a national bank's
fiduciary relationships); 12 CFR 150.60 (same).
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The OCC proposes codifying in proposed Sec. 15.21(c) the exception
in section 10(c) of the GENIUS Act (12 U.S.C. 5909(c)) to the customer
property requirements described in section 10(b). This exception
permits a covered custodian to withdraw and apply such share of the
covered assets of a covered customer necessary to transfer, adjust, or
settle a transaction or transfer of assets applicable to that covered
customer, including the payment of commissions, taxes, storage, and
other charges lawfully accruing in connection with the provision of
services to that covered customer by the covered custodian. The OCC
proposes to specify that any such withdrawal must be consistent with
any applicable law. For example, the OCC would expect any such
withdrawal to be undertaken only in compliance with the terms of a
covered customer's written custodial agreement and that any withdrawal
of funds from an omnibus account would be properly recorded as to not
implicate the custodial assets of any other covered customer.
Finally, proposed Sec. 15.21(d) would clarify, consistent with
section 10(c)(2)(D) of the GENIUS Act (12 U.S.C. 5909(c)(2)(D)), that
an insured national bank or Federal savings association that provides
custodial or safekeeping services for covered assets may hold covered
assets that are in the form of cash on deposit, provided such treatment
is consistent with Federal law.
3. Use of Omnibus Accounts (Proposed Sec. 15.22)
Proposed Sec. 15.22(a) would implement the GENIUS Act's
requirement in section 10(c) of the Act (12 U.S.C. 5909(c)) that a
covered custodian segregate all covered assets of covered customers and
not commingle them with the assets of the covered custodian. As
discussed above, the proposal clarifies that this requirement does not
apply in the case of a depository institution that provides custodial
or safekeeping services for covered assets that are in the form of cash
to the extent the depository institution holds such cash in the form of
cash on deposit, provided such treatment is consistent with Federal
law.
Proposed Sec. 15.22(b) sets the terms by which covered custodians
may use omnibus accounts consistent with the GENIUS Act's requirements
to separately account for, treat as, and deal with custodied covered
assets as belonging to covered customers. The OCC is proposing to allow
any covered custodian to commingle the covered assets of multiple
covered customers in one or more omnibus accounts, to the extent that
the steps it has taken pursuant to proposed Sec. 15.21(b) are adequate
to maintain safe and sound practices for the use of omnibus accounts,
and to the extent that the use of omnibus accounts is consistent with
applicable law.
4. Reporting
The OCC is considering whether to implement any additional
reporting requirements in subpart C pursuant to section 10(d) of the
GENIUS Act (12 U.S.C. 5909(d)), which requires that a covered custodian
submit to the OCC certain information ``in such form and manner as [the
OCC] shall determine.'' For covered custodians that are national banks,
Federal savings associations, or Federal branches, the OCC proposes to
seek to rely on the reporting such institutions already provide on
their custodial businesses pursuant to Schedule RC-T of the
Consolidated Report of Condition and Income (Call Report).\90\ For
covered custodians that are non-bank Federal qualified payment
stablecoin issuers and State qualified payment stablecoin issuers with
an outstanding issuance value of more than $10 billion and have
transitioned to the Federal regulatory framework administered in
coordination with the OCC, the OCC proposes to rely on such entities'
reporting pursuant to section 6(a)(2) of the GENIUS Act's (12 U.S.C.
5905(a)(2)) reporting requirements as part of the payment stablecoin
issuers' quarterly report on financial condition discussed in proposed
Sec. 15.14.\91\ The OCC seeks comment on whether this is the most
efficient and effective way to collect such information concerning a
covered custodian's business operations
[[Page 10232]]
as well as their processes to protect customer assets.
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\90\ The OCC believes that reporting the private key used to
issue a payment stablecoin held in custody at a $1.00 book value
would be consistent with the Call Report Schedule RC-T instructions,
unless the methodology for determining market value is otherwise set
by applicable law. See, e.g., OCC, Letter from Kerri Corn, Director
for Credit and Market Risk (June 20, 2007), https://www.occ.treas.gov/topics/supervision-and-examination/capital-markets/asset-management/corporate-trust/memo-misc-schedule-rc-t.pdf
(letter to the American Bankers Association regarding owner trustee
fiduciary accounts reported on Schedule RC-T).
\91\ As noted above, section 10(d) of the GENIUS Act (12 U.S.C.
5909(d)) provides an additional statutory grant of authority for
this reporting requirement.
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Nonetheless, requiring covered custodian-specific reporting outside
of the context of a Call Report may be appropriate. Schedule RC-T of
the Call Report does not provide a breakdown of the specific assets
under custody, and as such may not provide a sufficient insight
necessary to effectively supervise the unique risks related to the
custody of covered assets. Additionally, Schedule RC-T may not be
applicable to all covered custodians, to the extent that they do not
provide fiduciary services. As such, the OCC is considering requiring
covered custodians to report on a separate form maintained by the OCC
the following information: (1) total covered assets under custody, and
(2) total payment stablecoin reserves under custody. For payment
stablecoin reserves under custody, the OCC is further considering
requiring covered custodians to report the following: (a) total payment
stablecoin reserves under custody for (i) an affiliate and (ii) third
parties; (b) total payment stablecoin reserves held in a deposit
account at (i) the covered custodian and (ii) a third-party depository
institution; (c) total payment stablecoin reserves held in a deposit
account that are not covered by FDIC insurance at (i) the covered
custodian and (ii) a third party depository institution; and (d) total
payment stablecoin reserves held in each of the categories listed in
section 4(a)(1)(A)(i)-(viii) of the GENIUS Act (12 U.S.C.
5903(a)(1)(A)(i)-(viii)).
5. Self-Custody Hardware and Software Exclusion (Proposed Sec. 15.23)
The proposal implements section 10(e) of the GENIUS Act (12 U.S.C.
5909(e)), which provides that the requirements of section 10 of the Act
do not apply to any person solely on the basis that such person engages
in the business of providing hardware or software to facilitate a
customer's own custody or safekeeping of the customer's payment
stablecoins or private keys. In proposed Sec. 15.23, the OCC proposes
to clarify that the requirements of this proposed subpart C do not
apply to any national bank, Federal savings association, Federal
branch, or permitted payment stablecoin issuer solely on the basis that
such entity engages in the business of providing hardware or software
to facilitate a person's or entity's self-custody of their payment
stablecoins or private keys. The requirements could nonetheless apply
if, for example, an entity controls or holds itself out as controlling
such payment stablecoins or private keys, or provides, or holds itself
out as providing safekeeping or custodial services, including services
that are ancillary or incidental to its custodial powers, for such
payment stablecoins or private keys.
D. Subpart D--Applications and Registrations
Section 5 of the GENIUS Act (12 U.S.C. 5904) establishes a
licensing regime for insured depository institutions that seek to issue
payment stablecoins through a subsidiary and for nonbank entities,
uninsured national banks, and uninsured Federal branches that seek to
issue payment stablecoins as Federal qualified payment stablecoin
issuers. Section 18(a) of the GENIUS Act (12 U.S.C. 5916(a)) provides
an exception from the prohibition in section 3 of the GENIUS Act (12
U.S.C. 5902) for foreign payment stablecoin issuers registered with the
OCC and sets forth the registration regime and other requirements for
foreign issuers. The OCC is proposing subpart D of part 15 to implement
these provisions of the GENIUS Act.
1. Approval of Permitted Payment Stablecoin Issuers (Proposed Sec.
15.30)
The OCC is proposing Sec. 15.30 to provide for the licensing of
insured national banks, Federal savings associations,\92\ and insured
Federal branches that seek to establish subsidiaries to issue payment
stablecoins and for nonbank entities, uninsured national banks, and
uninsured Federal branches that seek to issue payment stablecoins as a
Federal qualified stablecoin issuer. In accordance with section 5 of
the GENIUS Act (12 U.S.C. 5904), proposed paragraph (a) would require
insured national banks, Federal savings associations, and insured
Federal branches as well as nonbank entities, uninsured Federal
branches, and uninsured national banks to file an application and
obtain OCC prior approval before issuing payment stablecoins under the
GENIUS Act. Under proposed paragraph (a)(1), any insured national bank,
Federal savings association, or insured Federal branch that seeks to
issue payment stablecoins through a subsidiary would be required to
file an application under Sec. 15.30 and receive prior approval from
the OCC before issuing payment stablecoins.\93\ Under proposed
paragraph (a)(2), any nonbank entity, uninsured national bank, or
uninsured Federal branch that seeks to issue payment stablecoins as a
Federal qualified payment stablecoin issuer would be required to file
an application and receive prior approval from the OCC before issuing
payment stablecoins. The OCC intends the process provided under
proposed Sec. 15.30 to be comprehensive for stablecoin issuance and
other activities described in proposed Sec. 15.10(a) and that other
filings with the OCC would not be required. This is consistent with the
OCC's general approach of not requiring multiple filings for the same
activity. For example, to the extent that stablecoin issuance would
involve membership in a payment system and notice to join a payment
system was provided during the filing process, no additional filing
under 12 CFR 7.1026 would be required at that time.
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\92\ Unlike national banks and Federal branches, all Federal
savings associations are required to be insured by the FDIC. See 12
U.S.C. 1813(b)(2) and 1462(2)-(3).
\93\ Consistent with the definition of permitted payment
stablecoin issuer in section 2(23) of the GENIUS Act (12 U.S.C.
5901(23)), the OCC would not approve an insured national bank or a
Federal savings association to issue a payment stablecoin directly
(as opposed to through a subsidiary).
---------------------------------------------------------------------------
Proposed paragraph (b) would set forth the application process.
Proposed paragraph (b)(1)(i) would require that the applicant submit
all the information required by a form for an application under this
section that would be available at www.occ.gov. Under proposed
paragraph (b)(1)(ii) each director, executive officer, and principal
shareholder of the applicant (or in the case of an applicant that is an
insured national bank, Federal savings association or Federal branch,
of the subsidiary of the applicant) must submit the information
prescribed in the Interagency Biographical and Financial Report.\94\
Proposed paragraph (b)(1)(iii) would require that the applicant certify
that neither the filing nor any supporting material submitted to the
OCC contain material misrepresentations or omissions. Proposed
paragraph (b)(2) would direct that an application be submitted to the
appropriate OCC licensing office, unless the OCC advises a filer
otherwise. The certification and location of filing provisions are
substantially the same as those in the OCC's general application filing
provisions in 12 CFR 5.4.
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\94\ Proposed Sec. 15.2 would define 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.''
Thus, persons that are principal shareholders as a result of
indirect control must submit the information in the Interagency
Biographical and Financial Report.
---------------------------------------------------------------------------
Proposed paragraph (b)(3) would include provisions regarding
substantially complete applications and the review thereof. Section
5(d)(1)(B)(i)
[[Page 10233]]
of the GENIUS Act (12 U.S.C. 5904(d)(1)(B)(i)) defines a substantially
complete application as one that contains sufficient information for
the primary Federal stablecoin regulator to render a decision based on
the factors in section 5(c) of the GENIUS Act (12 U.S.C. 5904(c)).
Proposed Sec. 15.30(b)(3)(i) would restate this requirement,
referencing the factors in proposed paragraph (c) of Sec. 15.30.
Section 5(d)(1)(B)(ii) of the GENIUS Act (12 U.S.C. 5904(d)(1)(B)(ii))
requires that the primary Federal payment stablecoin regulator notify
the applicant as to whether the application is considered substantially
complete. If the application is not substantially complete, the primary
Federal payment stablecoin regulator must inform the applicant of the
information needed for the application to be considered substantially
complete. Proposed Sec. 15.30(b)(3)(ii) would set forth these
requirements and provide that the OCC will notify applicants not later
than 30 days after receipt of an application whether the application is
substantially complete. If the application is not substantially
complete, the OCC will notify the applicant of the information required
in order for the application to be substantially complete. Proposed
paragraph (b)(3)(iii) would state that the OCC will notify applicants
not later than 30 days after receipt of the additional information
whether the application is substantially complete. Proposed paragraph
(b)(3)(iv) would state that an application is considered substantially
complete as of the date the OCC receives the information required for
the application to be substantially complete. The 120-day requirement
for the OCC to render a decision, as required by section 5(d)(1)(A) of
the GENIUS Act (12 U.S.C. 5904(d)(1)(A)), is measured from the date on
which the application becomes substantially complete. The OCC believes
that measuring from the date that the application becomes substantially
complete is most consistent with section 5 of the GENIUS Act and would
facilitate appropriate review of applications. First, the statute
refers to responding within 120 days of receiving a substantially
complete application, which clearly contemplates that the 120-day
period does not begin to run upon the submission of an application that
is not substantially complete. Second, section 5(e)(2) of the GENIUS
Act (12 U.S.C. 5904(e)(2)) requires the primary Federal payment
stablecoin regulator to annually report to Congress on applications
that have been pending for 180 days or more since being initially
filed, including documenting the status of the applications and why the
applications have not been approved, and directs the regulator to
inform applicants that their applications remain incomplete. This
provision indicates that Congress contemplated the process potentially
taking more than 120 days when the initial application was incomplete.
Further, permitting an applicant to render an application substantially
complete at any time during the running of the 120-day period could
substantially hamper OCC review. For example, an applicant could submit
information making the application substantially complete on the 119th
day after the initial submission. If the review period were measured
from the initial, incomplete application, the OCC would have a single
day to review potentially voluminous new information. Accordingly, the
OCC is proposing that the 120 days runs from the submission of the
information required to make the application substantially complete.
Proposed paragraph (b)(3)(iv) therefore states that an application is
considered substantially complete as of the date the OCC receives the
information required for the application to be substantially complete.
Section 5(d)(1)(B)(iii) of the GENIUS Act (12 U.S.C.
5904(d)(1)(B)(iii)) states that a substantially complete application
remains so unless there is a material change in circumstances that
requires the primary Federal payment stablecoin regulator to treat the
application as a new application. Proposed Sec. 15.30(b)(3)(v) would
codify this provision in the OCC's regulations by stating that if the
OCC determines that an application is substantially complete, the
application remains substantially complete unless there is a material
change in circumstances that requires the OCC to treat the application
as a new application. Consistent with the OCC's general licensing
regulations in 12 CFR 5.7, proposed Sec. 15.30(b)(4) would provide
that the OCC may examine or investigate and evaluate facts relating to
an application under this section to the extent necessary to reach an
informed decision. Proposed paragraph (b)(4) would also state that the
OCC may collect fingerprints of the individuals listed in proposed
paragraph (b)(1)(ii) for submission to the Federal Bureau of
Investigation for a national criminal history background check.
Section 5(d)(3) of the GENIUS Act (12 U.S.C. 5904(d)(3)) provides
that an application is deemed approved if the primary Federal payment
stablecoin regulator fails to render a decision within 120 days of
receipt of a substantially complete application. Proposed Sec.
15.30(b)(5) would provide that a substantially complete application
under that section would be deemed approved as of the 120th day of
receipt by the OCC of the substantially complete application, unless
the OCC denies the application under proposed paragraph (d) of that
section.
Section 5(c) of the GENIUS Act (12 U.S.C. 5904(c)) prescribes
factors for evaluating a substantially complete application: the
ability of the applicant (or subsidiary in the case of an insured
depository institution), based on financial condition and resources, to
meet the requirements of section 4 of the GENIUS Act (12 U.S.C. 5903);
whether any of the applicant's officers or directors have been
convicted of a felony offense involving insider trading, embezzlement,
cybercrime, money laundering, financing of terrorism, or financial
fraud; the competence, experience, and integrity of the officers,
directors, and principal shareholders of the applicant, its
subsidiaries, and parent company, including their record of compliance
with laws and regulations and their ability to fulfill certain
commitments or conditions imposed by the OCC in connection with the
application at issue or any prior application; whether the applicant's
redemption policy meets the standards under section 4(a)(1)(B) of the
GENIUS Act (12 U.S.C. 5903(a)(1)(B)); and any other factors established
by the primary Federal payment stablecoin regulator that are necessary
to ensure the safety and soundness of the permitted payment stablecoin
issuer. Proposed Sec. 15.30(c) would contain the four specific factors
established by section 5(c) of the GENIUS Act (12 U.S.C. 5904(c)),
cross-referencing proposed Sec. 15.12 for the redemption policy. The
OCC seeks comment on whether to include additional factors necessary to
ensure the safety and soundness of the permitted payment stablecoin
issuer.
Section 5(d)(2)(A)(i) of the GENIUS Act (12 U.S.C.
5904(d)(2)(A)(i)) provides that a primary Federal stablecoin regulator
may only deny a substantially complete application if the applicant's
activities would be unsafe or unsound based on the factors described in
section 5(c) of the GENIUS Act (12 U.S.C. 5904(c)). Section 5(d)(2)(B)
of the GENIUS Act (12 U.S.C. 5904(d)(2)(B)) requires that if a primary
Federal payment stablecoin regulator denies a substantially complete
application, it must provide written notice to the applicant not later
than 30 days from date of denial, explaining the denial
[[Page 10234]]
with specificity, including, all findings with respect to identified
material shortcomings and actionable recommendations on how the
applicant could address the shortcomings. Proposed Sec. 15.30(d) would
set forth these provisions in regulation.
Section 5(d)(2)(C) of the GENIUS Act (12 U.S.C. 5904(d)(2)(C))
requires that an applicant whose application has been denied be given
an opportunity for a written or oral hearing before the primary Federal
payment stablecoin regulator to appeal the denial. The primary Federal
payment stablecoin regulator shall notify the applicant of a time, not
later than 30 days after receipt of a timely request for a written or
oral hearing, and place for the applicant to appear, personally or
through counsel, to submit written materials or provide oral testimony
and oral argument. The primary Federal payment stablecoin regulator
must notify the applicant of a final determination, the basis for that
determination, and specific findings, within 60 days after the hearing.
If an applicant does not timely request a hearing, the primary Federal
stablecoin regulator must notify the applicant in writing within 10
days of the expiration of the hearing request period that the denial is
a final determination.
Proposed Sec. 15.30(e) would set forth this appeals process, in
accordance with the requirements of the GENIUS Act. Proposed paragraph
(e)(1) would provide that an applicant may request a written or oral
hearing to appeal the OCC's denial of a substantially complete
application within 30 days of receipt of the OCC's notice of denial.
The request for a written or oral hearing would need to be in writing.
Proposed paragraph (e)(2) would provide that, if the applicant does not
make a timely appeal for a hearing, the OCC will notify the applicant,
in writing and within 10 days of the date the applicant would have been
able to request a hearing, that the denial of the substantially
complete application is the final determination of the OCC. Proposed
paragraph (e)(3) would provide that, within 30 days of receiving a
timely appeal request, the OCC will notify the applicant of a time and
place at which the applicant may appear, personally or through counsel,
to submit written materials or provide oral testimony and oral
argument. The applicant would need to submit all documents and written
arguments that the applicant wishes to be considered in support of a
written appeal. Proposed paragraph (e)(4) would provide that the
Comptroller or authorized delegate would conduct the appeals process,
which would be a de novo review of the original substantially complete
application, the material before the OCC official who made the initial
denial decision, and any information submitted by the applicant at the
time of the appeal. Proposed paragraph (e)(5) would provide that the
Comptroller or authorized delegate would notify the applicant in
writing of a final determination within 60 days of the hearing. The
final determination would explain the findings on which the
determination is based. If the initial decision is upheld, the decision
to deny the substantially complete application would be effective as of
the date of the original denial. Finally, proposed paragraph (e)(6)
would expressly provide that denial of a substantially complete
application does not prohibit the applicant from filing a subsequent
application, in accordance with section 5(d)(4) of the GENIUS Act (12
U.S.C. 5904(d)(4)).
Section 5(f) of the GENIUS Act (12 U.S.C. 5904(f)) permits the
primary Federal stablecoin regulators to waive the requirements of the
GENIUS Act for up to 12-months for (1) subsidiaries of insured
depository institutions and (2) Federal qualified payment stablecoin
issuers with pending applications as of the Act's effective date.
Proposed Sec. 15.30(f) would implement this safe harbor. Proposed
paragraph (f)(1) would provide for requests by insured national banks,
Federal savings association, and insured Federal branches for a waiver
on behalf of their proposed payment stablecoin issuer subsidiary.
Proposed paragraph (f)(1) would state that an insured national bank,
Federal savings association, or insured Federal branch that has a
pending substantially complete application under Sec. 15.30 for a
subsidiary to become a permitted payment stablecoin issuer on or before
the effective date of the GENIUS Act may request, in writing, that the
OCC waive the requirements of Section 4 of the GENIUS Act (12 U.S.C.
5903) with respect to that subsidiary. Proposed paragraph (f)(2) would
provide the same for nonbank entities, uninsured national banks, and
uninsured Federal branches applying to be a Federal qualified payment
stablecoin issuer and would state that the nonbank entity, uninsured
national bank, or uninsured Federal branch that has a pending
substantially complete application under this section to become a
Federal qualified payment stablecoin issuer on or before the effective
date of the GENIUS Act may request, in writing, that the OCC waive the
requirements of Section 4 of the GENIUS Act with respect to that
entity. Proposed paragraph (f)(3) would provide that the OCC may grant
a waiver for up to 12 months beginning on the effective date of the
GENIUS Act if it finds the waiver to be in the public interest or
extraordinary circumstances justify the waiver. The OCC anticipates
that it may begin evaluating any submitted requests for waiver after
issuance of the final rule but before the final rule becomes effective.
This is to ensure that there is ample time to evaluate waiver requests
and provide feedback before the final rule becomes effective. In light
of the discretion that Congress granted to the primary Federal
stablecoin regulators for waivers under section 5(f) of the GENIUS Act
(12 U.S.C. 5904(f)), the OCC believes that applicants should make an
appropriate showing for the OCC to grant a waiver. Finally, proposed
paragraph (f)(4) would clarify that the OCC may deny a substantially
complete application under proposed paragraph (d) even if it grants a
waiver. This provision would ensure that the OCC retains its authority
under the remainder of proposed Sec. 15.30 and section 5 of the GENIUS
Act (12 U.S.C. 5904) and provide for appropriate review of
applications. The OCC may deny an application notwithstanding a waiver
if, for example, it discovers significant issues during its review of
the application, even if the application was found to be substantially
complete.
Proposed paragraph (g)(1) would provide the OCC the ability to
nullify the approval of a substantially complete application under
proposed Sec. 15.30 if there is a material misrepresentation or
omission in the application or supporting materials, if the decision
was contrary to law or regulation, or was granted due to a clerical or
administrative error or a material mistake of law or fact. Proposed
paragraph (g)(2) would state that when the OCC intends to nullify the
approval of a substantially complete application, the OCC in its sole
discretion, will provide the applicant notice of the intended
nullification and grant the applicant an opportunity to oppose the
intended nullification in writing, or take any other action designed to
provide the applicant with notice and opportunity to present its views
concerning the intended nullification. As with the similar provision in
the OCC's general licensing regulations in Sec. 5.13(h), the OCC
believes that the provisions in proposed paragraph (g)(2) would help
preserve the integrity of the application process.\95\ The OCC notes
that it rarely nullifies decisions under Sec. 5.13 and only under
extraordinary circumstances.
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\95\ See 61 FR 60342, 60346 (November 27, 1996).
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[[Page 10235]]
2. Foreign Payment Stablecoin Issuers (Proposed Sec. 15.31)
Section 18(a) of the GENIUS Act (12 U.S.C. 5916(a)) exempts a
foreign payment stablecoin issuer from the prohibitions of section 3 of
the GENIUS Act (12 U.S.C. 5902) if it meets all of the following
requirements: (1) the foreign payment stablecoin issuer is subject to
regulation and supervision by a foreign payment stablecoin regulator
that has a regulatory and supervisory regime comparable to the GENIUS
Act with respect to payment stablecoins, as determined by the Secretary
of the Treasury under section 18(b) of the GENIUS Act; (2) the foreign
payment stablecoin issuer is registered with the OCC; (3) the foreign
payment stablecoin issuer holds reserves in a United States financial
institution sufficient to meet demands of United States customers,
unless otherwise permitted under a reciprocal arrangement created and
implemented by the Secretary of the Treasury under section 18(d) of the
GENIUS Act (12 U.S.C. 5916(d)); and (4) the foreign country in which
the foreign payment stablecoin issuer is domiciled and regulated is not
subject to comprehensive economic sanctions by the United States or in
a jurisdiction that the Secretary of the Treasury has determined to be
a jurisdiction of primary money laundering concern. The OCC is
proposing Sec. 15.31 to establish this exemption in proposed paragraph
(a) and include the additional requirements applicable to foreign
payment stablecoin issuers wishing to operate in the United States
under the GENIUS Act.
In accordance with section 18(c)(2) of the GENIUS Act (12 U.S.C.
5916(c)(2)), proposed paragraph (b) would subject foreign payment
stablecoin issuers to ongoing monitoring by the OCC, including
reporting, supervision, and examinations. Proposed paragraph (b)(1)
would provide that a foreign payment stablecoin issuer registered with
the OCC pursuant to Sec. 15.32 must fully accede to any request by the
OCC regarding reporting, supervision, or examination of the foreign
payment stablecoin issuer. Proposed paragraph (b)(2) would provide
that, a foreign payment stablecoin issuer registered with the OCC under
proposed Sec. 15.32 must produce the reports required for permitted
payment stablecoin issuers under proposed Sec. 15.14 as well as any
other reports the OCC may require. A foreign payment stablecoin issuer
may request, in writing, an exemption from any reporting requirement
that would otherwise apply under Sec. 15.14. The OCC may grant an
exemption in its sole discretion. The OCC anticipates that it will
require foreign payment stablecoin issuers to submit all reports
required under Sec. 15.14, including the report relating to changes in
control described in Sec. 15.14(m), but the OCC may tailor its
requests for reports based, among other things, on the volume of the
foreign payment stablecoin issuer's payment stablecoins circulating in
the United States. Proposed paragraph (b)(3)(i) would subject a foreign
payment stablecoin issuer registered with the OCC under proposed Sec.
15.32 to a full-scope examination at the same frequency as the OCC
would examine a permitted payment stablecoin issuer under Sec. 15.14
unless the OCC determines, in its sole discretion, to examine at a
different frequency. For example, less frequent examinations may be
appropriate in circumstances where the volume of U.S. holdings and
transactions is a small fraction of a foreign payment stablecoin
issuer's business. Proposed paragraph (b)(3)(ii) would state that the
OCC may conduct these examinations on-site or remotely.
Section 4(a)(11) of the GENIUS Act (12 U.S.C. 5903(a)(11))
prohibits foreign payment stablecoin issuers from paying the holder of
a 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 the payment stablecoin. Proposed Sec. 15.31(c)
would implement the prohibition in accordance with the prohibition
applicable to permitted payment stablecoin issuers under proposed Sec.
15.10(c)(4). As in proposed Sec. 15.10(c)(4), the prohibition is not
intended to prevent a merchant from independently offering a discount
to a payment stablecoin holder for using payment stablecoins and is
also not intended to prevent a permitted payment stablecoin issuer from
sharing in the profits derived from the payment stablecoin with a
partner in a situation where the issuer issues the payment stablecoin
on behalf of the partner, which is sometimes referred to as a ``white-
label'' arrangement.
Proposed Sec. 15.31(d) would provide that the OCC would make
available on www.occ.gov a list of foreign payment stablecoin issuers
whose registrations the OCC has approved.
3. Registration of Foreign Payment Stablecoin Issuers (Proposed Sec.
15.32)
Section 18(c) of the GENIUS Act (12 U.S.C. 5916(c)) provides
procedures for foreign payment stablecoin issuers who seek to become
registered to submit an application with the OCC. The OCC is proposing
Sec. 15.32 to include specific procedures for registration
applications. Proposed paragraph (a) would provide that a foreign
payment stablecoin issuer that seeks to be registered with the OCC
under section 18(c) of the GENIUS Act (12 U.S.C. 5916(c)) must submit
an application under this section.
Proposed paragraph (b) would set forth the application process.
Proposed paragraph (b)(1)(i) would require that the applicant submit
all the information required by a form for an application under this
section that would be available at www.occ.gov. Paragraph (b)(1)(ii)
would require the applicant to provide evidence that the Secretary of
the Treasury has determined that the applicant is subject to a
regulatory and supervisory regime comparable to the GENIUS Act with
respect to payment stablecoins, under section 18 of the GENIUS Act (12
U.S.C. 5916). Proposed paragraphs (b)(1)(iii) and (iv) would require
the applicant to certify that it will provide to the OCC all the
information the OCC deems necessary to determine and enforce compliance
with the GENIUS Act and to consent to United States jurisdiction
relating to enforcement of the GENIUS Act and its implementing
regulations, respectively. In addition, proposed paragraph (b)(1)(v)
would require the applicant to certify that neither the filing nor any
supporting material submitted to the OCC contains material
misrepresentations or omissions. Proposed paragraph (b)(2) would direct
that an application be submitted to the appropriate licensing office,
unless the OCC advises a filer otherwise. The information certification
and location of filing provisions in proposed paragraphs (b)(1)(iii)
and (b)(2) are substantially the same as those in the OCC's general
application filing provisions in 12 CFR 5.4. Consistent with the OCC's
general licensing regulations in 12 CFR 5.7(a), proposed Sec.
15.32(b)(3) would provide that the OCC may examine or investigate and
evaluate facts relating to an application under this section to the
extent necessary to reach an informed decision.
Section 18(c)(1)(B) of the GENIUS Act (12 U.S.C. 5916(c)(1)(B))
provides that registration is deemed approved within 30 days of receipt
of an application for registration, unless the OCC notifies the
applicant in writing that the registration has been rejected. Proposed
Sec. 15.32(b)(4) would implement this approval provision and state
that an application for registration made by a foreign payment
stablecoin issuer that satisfies the requirements in Sec. 15.32(b)(1)
is deemed approved by the OCC as of the 30th day after the OCC received
the filing, unless the OCC notifies the filer
[[Page 10236]]
in writing that the application for registration has been rejected.
Section 18(c)(1)(C) of the GENIUS Act (12 U.S.C. 5916(c)(1)(C))
prescribes the factors for evaluating an application for registration:
the Secretary of the Treasury's determination that the foreign payment
stablecoin issuer is subject to a regulatory and supervisory regime
comparable to the GENIUS Act with respect to payment stablecoins under
section 18 of the GENIUS Act (12 U.S.C. 5916); the financial and
managerial resources of the United States operations of the foreign
payment stablecoin issuer; whether the foreign payment stablecoin
issuer will provide adequate information to the OCC to determine
compliance with the GENIUS Act; whether the foreign payment stablecoin
issuer presents a risk to the financial stability of the United States;
and whether the foreign payment stablecoin issuer presents illicit
finance risks to the United States. Proposed Sec. 15.32(c) would
contain these five factors and would add a reference to determining
compliance with proposed part 15 in addition to the GENIUS Act in
proposed paragraph (c)(3). Proposed paragraph (c)(4) states that risks
to the financial stability of the United States include risks relating
to ensuring timely redemption for United States customers. The OCC
proposes adding this explicit reference in light of potential
difficulties that may arise in the course of moving reserve assets in
cross-border transactions. The OCC believes that adding this reference
will highlight an important issue that foreign payment stablecoin
issuers will need to address.
Given the unique and novel character of foreign payment stablecoin
issuers, the OCC is proposing additional conditions applicable to all
foreign payment stablecoin issuers for whom the OCC has approved a
registration. The OCC believes these conditions are necessary for the
OCC to fulfill its mandate to monitor foreign payment stablecoin
issuers on an ongoing basis to determine compliance with applicable
GENIUS Act requirements. Section 18(c)(1)(C)(iii) of the GENIUS Act (12
U.S.C. 5916(c)(1)(C)(iii)) requires the OCC to consider whether a
foreign payment stablecoin issuer will provide adequate information to
the OCC as the OCC determines is necessary to determine compliance with
the GENIUS Act. Proposed paragraph (d)(1) would require that, upon
request by the OCC, a foreign payment stablecoin issuers must grant the
OCC prompt and complete access to all officers, directors, employees,
and agents and to all relevant books, records, or documents of any
type, in a form and location accessible to the OCC in the United
States. This would parallel the provisions regarding access to books
and records in proposed Sec. 15.14(b). Proposed paragraph (d)(2) would
further require the information be provided in English. Proposed
paragraph (d)(3) would require information sufficient to determine that
a foreign payment stablecoin issuer meets the reserve requirements of
section 18(a)(3) of the GENIUS Act (12 U.S.C. 5916(a)(3)).
Specifically, foreign payment stablecoin issuers would be required to
provide evidence that they hold sufficient reserves in the United
States to meet liquidity demands of United States customers on an
ongoing basis unless otherwise permitted under a reciprocal arrangement
implemented by the Secretary of the Treasury under section 18(d) of the
GENIUS Act (12 U.S.C. 5916(d)). Consistent with the statute, proposed
paragraph (d)(3)(i) would require the foreign payment stablecoin issuer
to hold these reserves in United States financial institutions.
Proposed paragraph (d)(3)(ii) would require the foreign payment
stablecoin issuer to provide to the OCC, on a monthly basis, a report
describing the total number of outstanding payment stablecoins issued
by the foreign payment stablecoin issuer held by United States
customers and the amount and composition of the foreign payment
stablecoin issuer's reserves, including their geographic location and
average tenor of reserve instruments. The proposed rule would provide a
template to facilitate reporting this information. Proposed paragraph
(d)(3)(iii) would require a foreign payment stablecoin issuer to
promptly notify the OCC through its supervisory office on any day in
which the issuer fails to meet the reserve asset requirements of
paragraph (d)(3). Proposed paragraph (d)(3)(iv) would require a foreign
payment stablecoin issuer to promptly and fully address any deficiency
in its compliance with proposed paragraph (d)(3) that is explained in
writing to the foreign payment stablecoin issuer by the OCC, including
by depositing additional liquidity in United States financial
institutions to the extent doing so would address the deficiency
identified. These requirements would help ensure that the registered
foreign payment stablecoin issuer complies with the requirements of
section 18(a)(3) of the GENIUS Act (12 U.S.C. 5916(a)(3)).
Section 18(c)(2)(B) of the GENIUS Act (12 U.S.C. 5916(c)(2)(B))
requires a foreign payment stablecoin issuer to consent to United
States jurisdiction relating to enforcement of the GENIUS Act. Proposed
paragraph (d)(4) would implement this provision by requiring foreign
payment stablecoin issuers to consent to the jurisdiction of the
Federal courts of the United States and of all United States government
agencies, departments and divisions for purposes of any and all claims
made by, proceedings initiated by, or obligations to, the United
States, the OCC and any other United States Government agency,
department or division, in any matter arising under the GENIUS Act and
other applicable Federal laws. The additional enumerated authorities to
which consent must be given in proposed paragraph (d)(4) accord with
the OCC's standard conditions on approvals for establishment of Federal
branches under the International Banking Act of 1978,\96\ and ensure
that the OCC and other agencies have the ability to bring actions
against foreign issuers. Lastly, under proposed paragraph (d)(5),
foreign payment stablecoin issuers would be required to comply with all
understandings, commitments, or conditions contained in any
determination by the Secretary of the Treasury or any arrangements
entered into by the United States and the foreign jurisdiction under
section 18 of the GENIUS Act (12 U.S.C. 5916).
---------------------------------------------------------------------------
\96\ 12 U.S.C. 3101 et seq.
---------------------------------------------------------------------------
In accordance with section 18(c)(1)(A)(i) of the GENIUS Act (12
U.S.C. 5916(c)(1)(A)(i)), proposed paragraph (e) would provide that the
OCC may reject a foreign payment stablecoin issuer's application for
registration by providing written notice of the rejection if the OCC
makes a negative finding with respect to any of the factors described
in proposed Sec. 15.32(c). Proposed paragraph (e) would also permit
the OCC to reject an application if the OCC determines that the foreign
payment stablecoin issuer would be unable to comply with the conditions
in proposed paragraph (d), compliance with which would be required for
all foreign payment stablecoin issuers registered under proposed Sec.
15.32.
Section 18(c)(1)(D) of the GENIUS Act (12 U.S.C. 5916(c)(1)(D))
provides the opportunity for a foreign payment stablecoin issuer whose
application was rejected to seek review by appealing the OCC's decision
within 30 days of receipt of the OCC's written decision. Proposed Sec.
15.32(f) would set forth this appeals process. Proposed paragraph (f)
would be substantially the same as that proposed for appeals of denials
under proposed Sec. 15.30(e). Proposed paragraph (f) would provide
that a foreign payment stablecoin issuer may request a written
[[Page 10237]]
or oral hearing to appeal the OCC's rejection of an application for
registration within 30 days of receipt of the OCC's notice of
rejection. The request for a written or oral hearing must be in
writing. If the foreign payment stablecoin issuer does not make a
timely appeal for a hearing under proposed Sec. 15.32, the OCC will
notify the applicant, in writing and within 10 days of the date the
applicant would have been able to request a hearing, that the denial of
the application is the final determination of the OCC. Within 30 days
of receiving a timely appeal request, the OCC will notify the applicant
of a time and place at which the applicant may appear, personally or
through counsel, to submit written materials or provide oral testimony
and oral argument. The foreign payment stablecoin issuer must submit
all documents and written arguments that the foreign payment stablecoin
issuer wishes to be considered in support of a written appeal. The
Comptroller or authorized delegate considers all information submitted
with the original application for registration, the material before the
OCC official who made the initial decision, and any information
submitted by the appellant at the time of appeal. The Comptroller or
authorized delegate considers all submitted documentation de novo. The
Comptroller or authorized delegate may uphold or reverse the initial
decision to reject the registration. Within 60 days of the hearing, the
Comptroller or authorized delegate will notify the foreign payment
stablecoin issuer in writing of a final determination. The final
determination will explain the findings on which the determination is
based. If the initial decision is upheld, the decision to deny the
application is effective as of the date of the original denial. The
denial of an application under this section shall not prohibit the
applicant from filing a subsequent application.
Finally, proposed paragraph (g) would provide for nullification of
an approval of a registration substantially the same as the procedure
in proposed Sec. 15.30(g). Thus, under proposed Sec. 15.32(g)(1), the
OCC may nullify the approval of a registration under this section if:
the OCC discovers a material misrepresentation or omission in any
information provided to the OCC in the application or supporting
materials; the decision is contrary to law or regulation thereunder; or
the decision was granted due to clerical or administrative error, or a
material mistake of law or fact. Proposed paragraph (g)(2) would set
forth the relevant procedures and provide that when the OCC intends to
nullify the approval of a registration, the OCC in its sole discretion,
will: provide the applicant with notice of the intended nullification
decision and grant the applicant an opportunity to present a written
submission opposing the intended nullification; or take any other
action designed to provide the applicant with notice and an opportunity
to present its views concerning the intended nullification.
4. Revocation or Rescission of Approval (Proposed Sec. 15.33)
Section 5(i)(3)(A) of the GENIUS Act (12 U.S.C. 5904(i)(3)(A))
permits the OCC to revoke the approval of a permitted payment
stablecoin issuer that does not submit the certification regarding
implementation of anti-money laundering and economic sanctions
compliance programs required by section 5(i)(1) of the GENIUS Act (12
U.S.C. 5904(i)(1)). Proposed Sec. 15.14(k) sets forth those
requirements. Similarly, section 18(c)(3)(A) of the GENIUS Act (12
U.S.C. 5916(c)(3)(A)) permits the OCC, in consultation with the
Secretary of the Treasury, to rescind approval of a registration of a
foreign payment stablecoin issuer if the OCC determines that the
foreign payment stablecoin issuer is not in compliance with the
requirements of the GENIUS Act, including for maintaining insufficient
reserves or posing an illicit finance risk or financial stability risk.
Proposed Sec. 15.33(a) would implement revocation of approval of a
permitted payment stablecoin issuers' application. Proposed paragraph
(a)(1) would state that the OCC may revoke approval of a permitted
payment stablecoin issuer's application under proposed Sec. 15.30 if
the permitted payment stablecoin issuer does not submit the
certification required by proposed Sec. 15.14(k). Proposed paragraph
(a)(2)(i) would state that the OCC may issue an order to revoke the
application approval after providing notice to the permitted payment
stablecoin issuer and after providing an opportunity for a hearing.
Proposed paragraph (a)(2)(ii) would provide that the OCC would conduct
a hearing pursuant to the OCC's Rules of Practice and Procedures in 12
CFR part 19. Proposed paragraph (a)(2)(iii) would provide for expedited
OCC action without an opportunity for a hearing if it determines that
expeditious action is necessary in order to protect the public
interest. In this situation, the OCC may, in its sole discretion,
provide the permitted payment stablecoin issuer with notice of the
intended revocation, grant the permitted payment stablecoin issuer an
opportunity to oppose the revocation in writing, or take any other
action designed to provide the permitted payment stablecoin issuer with
notice and an opportunity to present its views concerning the
revocation of application approval. Proposed paragraph (a)(3) would
state that a decision to revoke an application approval would be
effective upon provision of notice to the permitted payment stablecoin
issuer, unless otherwise specified by the OCC.
Proposed paragraph (b) would provide procedures for rescission of
approval of a registration of a foreign payment stablecoin issuer.
Proposed paragraph (b) would be substantially the same as proposed
Sec. 15.33(a), except that proposed paragraph (b)(1) would refer to
the OCC's consultation with the Secretary of the Treasury, consistent
with section 18(c)(3)(A) of the GENIUS Act (12 U.S.C. 5916(c)(3)(A))
and paragraph (b)(3) would provide that a decision to rescind approval
of a registration is effective upon publication in the Federal
Register, as required by section 18(c)(3)(A) of the GENIUS Act (12
U.S.C. 5916(c)(3)(A)), unless otherwise specified by the OCC. The OCC
may, for example, specify a later effective date than the date of
publication in the Federal Register. Under proposed Sec. 15.33(b),
except as otherwise provided, the OCC may issue an order to rescind the
foreign payment stablecoin issuer's registration approval under
proposed Sec. 15.32 after providing notice to the foreign payment
stablecoin issuer and providing an opportunity for a hearing. Proposed
paragraph (b)(2)(ii) would provide that OCC will conduct a hearing
under this section pursuant to the OCC's Rules of Practice and
Procedures in 12 CFR part 19. Proposed paragraph (b)(2)(iii) would
provide that the OCC may act without providing an opportunity for a
hearing if it determines that expeditious action is necessary in order
to protect the public interest. When the OCC finds that it is necessary
to act without providing an opportunity for a hearing, the OCC in its
sole discretion, may: provide the foreign payment stablecoin issuer
with notice of the intended recission of approval registration; grant
the foreign payment stablecoin issuer an opportunity to present a
written submission opposing recission of approval registration; or take
any other action designed to provide the foreign payment stablecoin
issuer with notice and an opportunity to present its views concerning
the recission of approval registration. Proposed paragraph (b)(3) would
provide that a decision to rescind
[[Page 10238]]
approval of a registration is effective upon publication in the Federal
Register, unless otherwise specified by the OCC.
The proposed revocation and recission procedures in proposed Sec.
15.33 are largely parallel those for termination of a Federal branch or
agency in 12 CFR 28.24(b). Similar to termination of a Federal branch
or agency, revocation of a permitted payment stablecoin issuer's
application approval or a foreign payment stablecoin issuer's
registration removes the entity's authorization to conduct certain
business activities in the United States. The effect of the OCC's
action does not otherwise terminate an entity's corporate existence or
affect any other rights. Accordingly, the OCC believes that the
procedures in proposed Sec. 15.33 strike the appropriate balance
between ensuring that the permitted payment stablecoin issuer or
foreign payment stablecoin issuer receives appropriate process before
the deprivation of its right to issue a payment stablecoin in the
United States and the potential need for expeditious action by the OCC
when necessary to protect the public interest.
E. Subpart E--Capital and Operational Backstop
Section 4(a)(4)(A)(i) of the GENIUS Act (12 U.S.C.
5903(a)(4)(A)(i)) requires the OCC to establish capital requirements
for permitted payment stablecoin issuers. The capital requirements must
be tailored to the business model and risk profile of permitted payment
stablecoin issuers and not exceed requirements sufficient to ensure the
ongoing operations of permitted payment stablecoin issuers. Consistent
with the statutory requirement, the OCC is proposing a minimum capital
requirement that will be tailored to the business model and risk
profile of a permitted payment stablecoin issuer. The OCC's proposed
approach for capital focuses primarily on the operational risk of
stablecoin issuers. While bank regulatory capital addresses a range of
additional risks, including credit risk, market risk, and interest rate
risk, these risks are either minimal for stablecoin issuers or
addressed through other means in the proposed rule, such as through
reserve asset liquidity and diversification requirements. Nevertheless,
this supplementary information discusses potential options that could
be considered to address these risks within the capital framework for
permitted payment stablecoin issuers.
Due to the novelty of payment stablecoins and various business
models for stablecoin issuers being discussed among industry
participants, the OCC believes that setting capital requirements based
on individual evaluations of prospective permitted payment stablecoin
issuers would be most appropriate at this time. Therefore, the overall
approach in the proposed rule would provide for an individualized
evaluation of each prospective permitted payment stablecoin issuer,
consistent with the process the OCC applies when determining minimum
capital requirements for chartering national trust banks under OCC
Bulletin 2007-21, ``Supervision of National Trust Banks: Revised
Guidance: Capital and Liquidity'' (June 26, 2007), and related
licensing policies. Under that guidance, the capital amount is based on
an analysis of quantitative and qualitative factors including, but not
limited to, financial projections, fixed and variable expenses, the
nature of fiduciary products and services being proposed, and
discussions with organizers.
In addition to establishing the initial capital requirement at
chartering or licensing, all permitted payment stablecoin issuers must
develop a process to assess and meet their capital requirements,\97\
with evaluation by the OCC through the examination process. As the OCC
gains additional experience and data from reviewing applications for
prospective payment stablecoin issuers and assessments performed by
established issuers with varying business models and risk profiles, the
OCC may revise its licensing procedures or this rule to incorporate
more standardized, objective capital requirements. The OCC discusses
potential options in the following sections and invites feedback on how
these options could be revised or incorporated into a final rule,
either as elements of a capital requirement, liquidity requirement, or
otherwise, due to the intertwined nature of capital and liquidity. For
example, under OCC Bulletin 2007-21, capital is generally used to
support a bank's risk profile, business strategies, future growth
prospects, and provide a cushion against unexpected losses, while
liquidity is used to meet a bank's obligations when they come due. A
bank that experiences unexpected losses that reduce the holdings of its
liquid assets will have less liquidity to satisfy current liabilities,
while a bank that needs to use liquidity to satisfy current liabilities
may be more limited in its business strategies or future growth
prospects.
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\97\ See proposed Sec. 15.41(a)(2)(ii).
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1. Capital Elements (Proposed Sec. 15.40)
Under the proposed rule, regulatory capital for permitted payment
stablecoin issuers would consist of two capital elements, common equity
tier 1 capital and additional tier 1 capital. These two elements are
generally consistent with the capital elements for national banks and
Federal savings associations under 12 CFR part 3. These elements
consist of common equity, retained earnings, and noncumulative
perpetual preferred stock that meet certain terms designed to ensure
significant loss-absorbing capabilities. For example, these terms
include provisions that require that the paid-in amount is equity under
GAAP, that limit dividends and that prohibit a permitted payment
stablecoin issuer from funding its own equity instruments to ensure
that there is a source of external capital to support the issuer's
operations. The OCC is also proposing this approach to create parity
among bank subsidiaries that plan to offer stablecoins, uninsured
national bank stablecoin issuers, current OCC national trust banks, and
non-bank-affiliated permitted payment stablecoin issuers with respect
to their capital instruments. The financial industry is also generally
familiar with the long-standing criteria for capital instruments to
qualify under the existing 12 CFR part 3 framework.
Common equity tier 1 capital would consist of common stock
instruments (par value, if any, and related surplus), retained
earnings, and any accumulated other comprehensive income (AOCI), all as
reported under GAAP. Common stock instruments would need to meet
various proposed criteria, including being the most subordinated claim
on the issuer's assets, being fully paid-in, having no maturity date,
and not being redeemable except with prior OCC approval. Any dividends
must be fully discretionary, paid out only after fulfillment of any
other legal or contractual obligations. In addition, the holders of the
instruments must bear losses equally, proportionally, and
simultaneously with other holders of common stock instruments. As the
most subordinated tier of regulatory capital, common equity tier 1
exhibits the most loss absorbency, as any dividends are discretionary
and there is no expectation of redemption or repurchase of the
instrument, ensuring any operating funds generated can be used for any
other business need of the issuer.
The OCC also is proposing to include AOCI as a component of common
equity tier 1 capital. While this treatment is consistent with the
OCC's requirement in 12 CFR part 3, the OCC is not
[[Page 10239]]
proposing to permit any neutralization of AOCI. The OCC permits
neutralization of components of AOCI under part 3 for certain banks in
part to reduce regulatory capital volatility associated with changes in
value of available-for-sale fixed income securities due to changes in
interest rates. These changes in value due to interest rate movements
are generally more pronounced the longer the remaining maturity of the
securities. As permitted payment stablecoin issuers can only hold
securities with remaining maturities of 93 days or less as reserve
assets, the change in value of these securities due to interest rate
movements likely would generate immaterial amounts of AOCI.
Additional tier 1 capital would consist of instruments that meet a
different set of proposed criteria, generally consistent with
noncumulative perpetual preferred stock issuances that are classified
as equity under GAAP. Generally, these instruments would be
subordinated to all claims except those of common shareholders. The
instruments could not have a maturity date but may be callable after at
least five years with prior approval of the OCC. To provide additional
flexibility to the issuer when needed, the terms of the instrument must
provide for the payment of dividends only if and when declared by the
board of directors of the issuer. This feature provides the permitted
payment stablecoin issuer the ability to retain earnings and capital if
needed. These provisions all help ensure that the instrument provides
significant loss absorbency by limiting the permitted payment
stablecoin issuer's obligations to holders. The OCC's capital framework
for banks also permits tier 2 capital elements, which primarily consist
of tier 2 capital instruments (subordinated debt instruments) and
certain allowances for credit losses. However, the OCC is not proposing
to adopt tier 2 capital elements for permitted payment stablecoin
issuers. Allowing a permitted payment stablecoin issuer to employ
subordinated debt instruments as capital may incentivize an issuer to
take on additional leverage with a stated repayment obligation, which
increases the pressure and risk on the issuer to generate enough income
to repay that obligation instead of increasing the ability of the
stablecoin issuer to absorb losses. Separately, as permitted payment
stablecoin issuers would not be providing loans or other credit to
customers, they likely would not have any allowance for credit losses.
The OCC's process for evaluating capital and liquidity requirements for
new uninsured national trust banks also considers only common equity
tier 1 capital and additional tier 1 capital but not tier 2 capital, so
the proposed approach would promote parity among these banks and other
permitted payment stablecoin issuers. The OCC notes that, based on
current Call Report data, no uninsured national trust banks issue any
tier 2 capital instruments and have immaterial amounts of tier 2
capital overall.
The proposed rule would not require any specific ratio between the
regulatory capital elements or minimum amounts of any capital element.
The OCC's current rules for national banks and Federal savings
associations set minimum ratios for each tier of capital to promote
more loss-absorbing capital by setting higher minimum ratios for those
elements and lower incremental ratios for less loss-absorbing capital
elements. However, the OCC does not believe a similar structure of
tiers and minimums is necessary for permitted payment stablecoin
issuers based on their variety of business models. The proposed
approach would also be consistent with current chartering for uninsured
national trust banks under OCC Bulletin 2007-21, which looks at total
equity capital amounts to address the risks of those entities.
The proposed rule would not require any specific deductions from
regulatory capital instruments for permitted payment stablecoin
issuers. The OCC's current rules for national banks in 12 CFR part 3
require deductions from capital for goodwill, other intangible assets,
and certain other assets such as mortgage servicing assets greater than
a specified amount of capital. The OCC's rules require these deductions
to implement statutory requirements applicable to insured depository
institutions or because the potentially volatile valuation of those
assets reduces their ability to absorb losses. While goodwill and other
intangible assets may exhibit similar valuation volatility on the
balance sheets of permitted payment stablecoin issuers, these risks may
be addressed though the backstop requirement and proposed requirements
around risk management, capital adequacy assessments, and liquidity.
For example, a stablecoin issuer that holds a significant amount of
goodwill from the acquisition of another entity would be expected to
appropriately incorporate in its capital adequacy assessment the risk
that the goodwill may become impaired and reduce retained earnings.
However, the OCC is also considering a deduction framework, which could
be more limited than the deductions required for national banks. A more
limited framework may focus deductions on goodwill and other intangible
assets, which may be difficult to value and would be unavailable to
satisfy redemption claims of stablecoin holders or support the issuer
during a business disruption.
Alternately, the OCC is considering a simplified capital instrument
framework for permitted payment stablecoin issuers. Under this
framework, any balance sheet account that qualifies as equity under
GAAP would qualify as a capital element, including common stock,
retained earnings, accumulated other comprehensive income, and certain
preferred stock. This alternative could be easier to implement,
particularly for non-bank-affiliated permitted payment stablecoin
issuers, as it relies on the GAAP definitions of equity without
layering on additional requirements. However, those additional
requirements reduce the risk to stablecoin holders and ensure that the
equity instruments are sufficiently loss absorbing. For example, the
additional proposed requirements help ensure a permitted payment
stablecoin issuer does not aggressively redeem equity instruments with
funds that are necessary to support the liquidity or operations of the
stablecoin and associated reserves, or make loans to potential
shareholders to purchase stock, which provides no loss absorbency. The
OCC could also consider a framework based on tangible capital, which
could start with GAAP equity, but deduct any intangible assets from
that amount. This approach could address the risk that a permitted
payment stablecoin issuer invests material amounts of capital in
generally illiquid and potentially volatile or difficult to value
intangible assets. These assets would likely be difficult liquidate if
needed to address business disruptions. However, the proposed backstop
may be sufficient to address these risks.
2. Minimum Capital Calculation (Proposed Sec. 15.41)
The OCC is proposing to establish a minimum capital requirement
framework based on the lifecycle of the permitted payment stablecoin
issuer. Under this framework, the OCC will establish the minimum
capital requirement for a permitted payment stablecoin issuer as part
of the chartering or licensing process that will apply for a minimum
timeframe, generally three years. For example, based on the recent
approvals for national trust banks engaging in
[[Page 10240]]
stablecoin issuance programs, the OCC will establish a monetary capital
amount for each issuer that must be maintained and a portion of which
must be maintained in certain liquid assets.\98\ Under this approach,
the OCC would consider factors such as projected revenues and expenses,
cash burn rates, and expenditures necessary to implement the proposed
business plan and activities of the applicant. This analysis may
include various scenarios based on projected stablecoin issuance
volumes, planned composition of reserves, and projected returns on
those reserves in different interest rate environments. During this
time, and afterward, the permitted payment stablecoin issuer also would
be required to assess its capital adequacy and maintain an amount of
capital that is commensurate with its business model and risk profile,
subject to review by the OCC.
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\98\ OCC News Release 2025-125, ``OCC Announces Conditional
Approvals for Five National Trust Bank Charter Applications''
(December 12, 2025), https://occ.gov/news-issuances/news-releases/2025/nr-occ-2025-125.html.
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a. De Novo Capital Requirement
Under proposed Sec. 15.41, the initial minimum capital requirement
would apply during the ``de novo period,'' generally the three-year
period following chartering or licensing by the OCC of the permitted
payment stablecoin issuer to issue stablecoins under this proposed
rule, or, in the case of State qualified payment stablecoin issuers,
transitioning to the OCC's regulatory framework. This timeframe may be
extended or shortened by the OCC. Generally, the OCC would expect to
lengthen the de novo period based on changes to the business model or
activities of the issuer, excessive volatility in issuance and
redemptions of the payment stablecoin, unexpected operating losses,
weak earnings, poor risk management, or violations of the GENIUS Act or
implementing rules. The OCC would expect to shorten the de novo period
for an entity that has a history of operating a stablecoin business
prior to the effective date of the OCC's final rule implementing the
GENIUS Act or for a permitted payment stablecoin issuer converting to
an OCC charter from another regulator. During the de novo period, the
requirements may be adjusted by the OCC based on the actual operations
of the permitted payment stablecoin issuer compared to projections or
as part of the licensing or chartering conditions.
This process is consistent with how the OCC evaluates and sets
capital requirements for chartering national trust banks under OCC
Bulletin 2007-21, and the OCC would expect to use many of the same
considerations when evaluating the appropriate capital amount during
the de novo period. For example, the OCC would consider the proposed
payment stablecoin issuer's risk profile, business strategy, future
growth prospects, and cushions for unexpected losses. At chartering or
licensing and during the de novo period, the OCC would consider factors
including: the composition, stability, and direction of revenue; the
level and composition of expenses; the level of retained earnings; the
quantity and direction of strategic risk; the quality of management
processes, including the adequacy of internal and external audit,
internal controls, and compliance management; the quantity of
transaction risk from delivery and administration of asset management
products and services; and the impact of external factors, including
economic conditions and evolving technology.
Under proposed Sec. 15.41(a)(1)(i)(B), the OCC is also proposing a
floor of $5 million on the minimum capital requirement during the de
novo period. This floor is primarily intended to ensure that every
proposed payment stablecoin issuer has sufficient resources to support
initial operations, particularly to cover the losses that are expected
to occur early in the startup phase of a new stablecoin. The OCC's
experience with chartering de novo national trust banks seeking to
provide stablecoin programs determined that minimum capital amounts
ranging from $6.05 million to $25 million would be necessary to
establish a viable business model.\99\
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\99\ See id.
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b. Ongoing Capital Requirement
The proposed rule would require all permitted payment stablecoin
issuers to calculate a minimum capital requirement based on an
evaluation of the risks associated with its business model and risk
profile. This amount would be based on estimates submitted during the
de novo chartering phase, and after approval, this amount must
incorporate the operating history of the permitted payment stablecoin
issuer and loss experienced from all sources, including operational
risk. The OCC will review and monitor this requirement and the amount
of capital held by the permitted payment stablecoin issuer as part of
the examination process. The amount of capital held by the permitted
payment stablecoin issuer must appropriately incorporate the operating
history and operational risk of the issuer, consistent with the
standards described above that the OCC uses to determine the capital
requirement for de novo stablecoin issuers. Although the OCC is not
currently proposing any floors on the minimum capital requirement or
frameworks for determining a minimum capital requirement for those
risks in the rule text, this section includes discussion of possible
options the OCC could consider adopting in a final rule or as part of a
future rulemaking. The OCC may also consider implementing a framework
for determining more objective capital requirements as the industry
evolves and permitted payment stablecoin issuers establish longer
operating histories.
While the capital requirement in the proposed rule text is the
OCC's preferred approach, the OCC is also considering a variable
capital component based on a percentage of outstanding issuance value.
This component could address operational risks associated with
maintaining the reserve assets and issuing payment stablecoins to
customers. This component may vary directly with the outstanding
issuance value. It could also address price and liquidity risks
associated with stablecoin reserve assets when those assets may need to
be liquidated at below-market value to meet redemption demands. This
component could also address price and credit risk associated with
certain stablecoin reserve assets, such as uninsured bank deposits and
certain reverse repurchase agreements. As the size of the outstanding
issuance value and corresponding reserve assets increase, the
operational risk may increase. A larger pool of underlying reserve
assets may increase the number and severity of hacking attempts, while
a larger outstanding issuance may encourage attempts to create
fraudulent payment stablecoins. Similarly, a larger pool of reserve
assets that may need to be liquidated in a short timeframe to satisfy a
run on the stablecoin would increase the risk that reserve assets would
need to be liquidated at prices below fair value. However, the risk may
not grow as quickly as the growth of reserve assets. Larger stablecoin
issuers may have more resources to spend on cybersecurity and other
risk mitigation strategies. One possible calibration for such a
requirement could be 1.0 percent for stablecoin reserves or outstanding
issuance value up to $10 billion, 0.40 percent for stablecoin reserves
or outstanding issuance value between $10 billion and $50 billion, and
0.20 percent
[[Page 10241]]
for stablecoin reserves or outstanding issuance value greater than $50
billion. However, the OCC also recognizes that a permitted payment
stablecoin issuer could manage these risks through application of
reserve asset diversification and liquidity measures. These measures
could reduce the risk of unanticipated loss and thus the need for a
significant amount of capital. Requirements to mitigate those risks are
included elsewhere in this proposal. Moreover, including a variable
component for operational risk based on outstanding issuance value may
disincentivize growth among permitted payment stablecoin issuers and
prevent their stablecoins from obtaining economies of scale. The OCC
therefore is not proposing to include a variable capital component for
operational risk based on a percentage of outstanding issuance value.
While the capital requirement in the proposed rule text is the
OCC's preferred approach, the OCC is also considering a variable
capital component tied more directly to price and interest rate risk of
stablecoin reserve assets. Under this approach, a capital charge would
apply to reserve assets that consist of U.S. Treasuries, repurchase
agreements, and tokenized versions of those assets. As a permitted
stablecoin issuer grows larger, there may be increased risk that a run
on the stablecoin will require liquidation of a significant amount of
underlying reserve assets over a short time. This may result in the
permitted payment stablecoin issuer receiving less than fair value for
certain reserve assets. While the proposed rule's reserve asset
provisions require consideration of the fair value of reserve assets,
for certain assets such as U.S. Treasuries, a permitted payment
stablecoin issuer may need to sell those assets into the market and
accept whatever price the market will offer at that time. A similar
risk also arises with reverse repurchase agreements entered into by the
permitted payment stablecoin issuer, as the counterparty may decline to
roll over the repurchase agreement, thus leaving the permitted payment
stablecoin issuer with additional Treasuries. In contrast, cash,
deposits, and money market funds likely could be redeemed at par value
with no interest rate risk loss to the permitted payment stablecoin
issuer. The OCC could consider calibrating this variable capital
component using the market price volatility haircuts used by national
banks to calculate exposure amounts for repo-style transactions in 12
CFR 3.37. This approach establishes a haircut of 0.5 percent for
Treasuries and Treasury collateral posted or received under repurchase
agreements with maturities up to one year, but the OCC could consider
more tailored and granular haircuts, such as 0.05 percent to 0.25
percent, which could vary based on the remaining time to maturity for
these reserve assets. However, imposing a capital requirement on only
certain payment stablecoin reserve assets may incentivize permitted
payment stablecoin issuers to focus on other reserve assets, such as
cash or bank deposits, that may have other risks or lower yields. This
approach may also introduce unnecessary complexity into the rule. The
OCC welcomes comment on the proposed approach in the regulatory text
and all alternatives.
While the capital requirement in the proposed rule is the OCC's
preferred approach, the OCC considered a variable capital component
tied to the credit risk of certain stablecoin reserve assets,
specifically uninsured bank deposits, reverse repurchase agreements,
and money market funds. Proposed Sec. 15.11(c) includes provisions
(whether as a requirement or safe harbor) that would encourage a
permitted payment stablecoin issuer to spread its deposits among
multiple institutions. Moreover, proposed Sec. 15.11(d) would require
certain large permitted payment stablecoin issuers to hold a minimum
amount of insured deposits. These provisions would help mitigate the
counterparty credit risk that a permitted payment stablecoin issuer
would face with respect to uninsured deposits. Thus, it may be
unnecessary to impose a variable capital component tied to uninsured
bank deposits. Currently, the FDIC and NCUA deposit insurance limits
are $250,000 per depositor per account ownership category at each
insured bank or credit union.\100\ Even if a stablecoin issuer
attempted to split its deposits among multiple insured institutions,
the total amount of insured deposits would likely be a small proportion
of total stablecoin reserves. For example, a stablecoin with $1 billion
of reserve assets that kept 10 percent of reserves in bank or credit
union deposits would need to spread those deposits among 400 accounts
to ensure all of those deposits remained fully insured. It is more
likely a stablecoin issuer would choose a much smaller group of insured
depository institutions and deposit a larger amount of reserves at
each, resulting in a significant amount of uninsured deposits. These
deposits would be subject to loss in the event of a failure of a
depository institution. To address this risk, the OCC could consider a
capital charge of 0.40 percent applied to uninsured deposits, or some
other amount, that could be calibrated based on the number of banks or
size of the uninsured deposit amount at each insured institution.
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\100\ All deposits placed by a depositor in a particular
ownership category--whether in one account or multiple deposit
accounts or at different branches or offices of the same IDI--are
aggregated and insured up to the standard maximum deposit insurance
amount for that ownership category. 12 CFR 330.3(a). Separate
insurance applies to each depositor, including natural persons,
legal entities such as corporations, partnerships, and
unincorporated associations, and public units such as cities and
counties. See, e.g., FDIC, ``General Principles of Insurance
Coverage'' (May 29, 2024), https://www.fdic.gov/resources/deposit-insurance/diguidebankers/documents/general-principles.pdf.
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Under section 4(a)(1)(A)(v) of the GENIUS Act (12 U.S.C.
5903(a)(1)(A)(v)), a reverse repurchase agreement may be entered into
by permitted payment stablecoin issuers on a cleared basis, tri-party
basis, or bilateral basis to satisfy reserve asset requirements. For
cleared reverse repurchase agreements, the transaction occurs through a
central clearinghouse that fully backs the transaction, resulting in
negligible counterparty credit risk. Under a tri-party repurchase
agreement, the collateral for the transaction is held by a third party,
reducing the credit risk to the counterparty. However, in bilateral
reverse repurchase agreements, the permitted payment stablecoin issuer
would rely solely on the collateral provided by its counterparty. Under
section 4(a)(1)(A)(v) of the GENIUS Act, acceptable collateral for
reverse repurchase agreements could consist of U.S. Treasury bills,
notes, or bonds, with no restrictions on original or remaining
maturity. Therefore, in a counterparty default, a stablecoin issuer
could receive long-dated Treasury securities with an extended time to
maturity. Even if the reverse repurchase agreement was significantly
overcollateralized, the price volatility of long-dated Treasuries could
significantly increase the risk of loss to the permitted payment
stablecoin issuer on the default of its counterparty.
To address this risk, the OCC could consider imposing a capital
requirement equivalent to the market price volatility haircut applied
to collateral for repo-style transactions for national banks in 12 CFR
3.37. The capital requirement could vary based on the remaining
maturity of the collateral and the credit risk of the stablecoin
issuer's counterparty. With respect to reserve assets in the form of
money market funds, section 4(a)(1)(A)(vi) of the GENIUS Act (12 U.S.C.
5903(a)(1)(A)(vi)) requires that a
[[Page 10242]]
permitted payment stablecoin issuer only hold money market funds that
invest in certain other eligible reserve assets; however, these include
bank deposits and reverse repurchase agreements that give rise to the
same risks as if held directly by the permitted payment stablecoin
issuer. Therefore, the OCC could consider a capital charge that would
require the permitted payment stablecoin issuer to look through to the
underlying assets of the money market fund, similar to the capital
requirement for a national bank's equity exposure to an investment fund
in 12 CFR 3.53.
However, the OCC considered that imposing a capital charge on these
types of reserve assets could incentivize permitted payment stablecoin
issuers to hold reserves in other types of assets that could be subject
to lower or no specific capital charge. The OCC does not want to
discourage stablecoin issuers from investing reserve assets in certain
permissible categories, particularly in deposits at community banks. In
addition, the OCC's proposed asset diversification and liquidity
requirements would help mitigate the risk of loss on reserve assets
without imposing a financial capital requirement.
While the capital requirement in the proposed rule is the OCC's
preferred approach, for permitted payment stablecoin issuers that also
provide custody services to customers, the OCC is considering a
variable capital component based on the fair value of assets held in
custody. Operating a custody business generates a separate set of risks
from operating a payment stablecoin business, and the risk is
potentially increased compared with a standalone custody business, as
any failure of the payment stablecoin would also impact operations of
the custody business. This capital component could reflect costs
associated with providing for ongoing operation of a stablecoin
issuer's custody business, irrespective of the success or failure of
the associated stablecoin issuance. This approach of assessing a
capital charge based on the size and scope of a custodian's business is
consistent with the GENIUS Act requirement that a permitted payment
stablecoin issuer's capital requirements be tailored based on the risk
profile of the issuer.\101\ However, the OCC currently does not impose
a capital charge based on assets under custody for national trust
banks. While establishing a different capital treatment for custody
activities at permitted payment stablecoin issuers versus at
traditional national trust banks may create disincentives for permitted
payment stablecoin issuers to provide custody services, the combined
operations of stablecoin and custody services may increase risks to
custody customers. For example, any losses generated from operation of
the stablecoin business reduce the overall financial condition of the
issuer and could impact operations of the custody business. The OCC
believes that the risks, in particular the operational risks,
associated with providing custody services can be adequately addressed
through the de novo and ongoing capital requirements in proposed Sec.
15.41(a)(1) and (2). Proposed Sec. 15.41(a)(2)(i) expressly states
that the capital maintained by the permitted payment stablecoin issuer
must be commensurate with the level and nature of all risks to which
the permitted payment stablecoin issuer is exposed, including risks for
off-balance sheet activities. Because the risks associated with
operating a custody business would be addressed through a holistic
assessment of the permitted payment stablecoin issuer's risks in the
proposal, the OCC does not propose to include a variable capital
component relating to assets under custody. The OCC generally expects
that entities engaged in custody businesses will require additional
capital to address the operational risk associated with this activity.
The OCC welcomes comment on the proposed approach and all alternatives.
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\101\ See 12 U.S.C. 5903(a)(4(A)(i).
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c. Operational Backstop
The OCC is proposing that a stablecoin issuer hold a designated
pool of highly liquid assets to maintain the ongoing operations of the
stablecoin issuer during a business disruption, referred to as the
operational backstop. This proposed backstop assets would be
independent of the de novo or ongoing capital requirements and from any
assets held as reserve assets. The purpose of the operational backstop
is to help ensure that during a business disruption that impacts
operations of the stablecoin issuer, a liquid pool of identifiable
assets exists to allow the stablecoin issuer to meet short term
liquidity needs, stabilize the issuer after the disruption, and
continue or resume normal operations. The operational backstop would be
calculated based on the actual total expenses of the stablecoin issuer
over the past 12 months. These expenses, including for utilities, data
processing, and salaries, are highly correlated with the permitted
payment stablecoin issuer's ability to maintain the operations of its
payment stablecoin and stabilize from a business disruption. At a
minimum, the operational backstop provides a runway for the permitted
payment stablecoin issuer to evaluate the source of the disruption and
potential responses without needing to take urgent action due to lack
of funds. The amount of the operational backstop would be calculated
each quarter, based on the permitted payment stablecoin issuer's total
expenses as reported in the four most recent quarterly reports filed
under Sec. 15.14 of the proposed rule. For de novo permitted payment
stablecoin issuers, the initial requirement would be based on
reasonable expense projections and adjusted each quarter based on
actual amounts for that quarter.
The operational backstop amount would need to be held as readily
available liquid assets to ensure that funds are available quickly
during a business disruption. Specifically, this amount would need to
be held in U.S. currency directly or at a Federal Reserve Bank, as
demand deposits at a U.S. insured depository institution, with those
deposits fully insured by the FDIC, or in U.S. Treasuries that meet the
requirements to qualify as reserve assets, which could be readily
liquidated. The assets associated with the operational backstop would
need to be separately identified in the reports filed under proposed
Sec. 15.14, and in any other financial statements of the permitted
payment stablecoin issuer, from any reserve assets required to support
the payment stablecoin and any other assets of the permitted payment
stablecoin issuer on any reports filed under proposed Sec. 15.14. This
approach aligns with one prong of the OCC's approach for chartering
national trust banks, which typically requires a pool of liquid assets
sufficient to cover six to 12 months of expenses.
While the OCC considered adjusting the operational backstop to more
specifically identify and categorize expenses used in calculating the
amount, this approach would create additional burden for issuers to
track specific expenses, as well as increase the risk of gaming the
backstop by issuers attempting to reclassify ongoing operating expenses
as one-time items. The OCC also does not want to create incentives or
disincentives for different business decisions, such as to purchase or
lease assets, by excluding non-cash expenses like depreciation from
total expenses.
The proposed minimum capital amount, the capital held by the
permitted payment stablecoin issuer, and the operational backstop would
be calculated as of the last day of each quarter and disclosed in the
reports
[[Page 10243]]
required under Sec. 15.14 of the proposed rule. Under the proposal, if
a permitted payment stablecoin issuer does not meet the minimum capital
requirement or have sufficient liquid assets to meet the operational
backstop at the end of a quarter, it must make efforts to satisfy the
capital requirement and backstop by the end of the following quarter.
These efforts may include raising additional capital, reducing the size
of the operations or risk profile of the issuer, or converting less-
liquid assets into highly liquid assets to satisfy the backstop. Until
the capital and backstop requirements are satisfied, the stablecoin
issuer would be restricted from issuing any new stablecoins, 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 so that the issuers can use their
liquidity to address any issues in times of stress instead of further
growing the risk by increasing the size of the stablecoin. If a
permitted stablecoin issuer fails to meet its capital or backstop
requirements for two consecutive quarters, it must begin liquidating
reserve assets and redeeming outstanding stablecoins at the start of
the following month and can no longer issue any new payment stablecoins
going forward. A permitted payment stablecoin issuer that is required
to redeem its stablecoins due to a shortage of capital or liquid assets
for the backstop would be prohibited from charging customers a fee for
redeeming those stablecoins. For example, if a permitted payment
stablecoin issuer did not have sufficient capital as of June 30, it
would be prevented from issuing new stablecoins, on a net basis,
starting in July. If the issuer increased its capital to meet the
minimum requirement on July 8, it could resume issuing stablecoins on
July 8. In contrast, if the stablecoin issuer did not satisfy its
capital or backstop requirements at any time during the quarter and did
not meet these requirements again on September 30, it would need to
begin redemption of its stablecoins starting on October 1, regardless
of whether it raises additional capital or meets the operational
backstop requirements going forward. While national trust banks only
report compliance with their minimum capital requirements every
quarter, the nature of permitted payment stablecoin issuers and the
potential for rapid inflows or outflows of funds to issue or redeem
stablecoins warrants a more timely response when there is a failure to
meet minimum capital and backstop requirements to ensure that a growing
outstanding issuance value is appropriately backed by sufficient
capital to address the risks associated with the stablecoin issuer and
any business disruptions. The provisions to limit issuance of new
stablecoins, and potentially redeem outstanding stablecoins, are
intended to ensure that a permitted payment stablecoin issuer maintains
an adequate capital base and operational backstop relative to its risks
and operations. The proposed quarterly calculation and assessment
aligns with the proposed frequency of reporting under proposed Sec.
15.14(i). However, more frequent capital calculations and assessments
may be appropriate due to potential fluctuations in stablecoin demand
or other factors.
3. Individual Additional Capital or Backstop Requirement (Proposed
Sec. 15.42)
The OCC expects that a permitted payment stablecoin issuer will
appropriately calculate a capital requirement under proposed Sec.
15.41(a) and (b) and would expect to resolve any concerns with the
capital adequacy assessment through the examination process. However,
in cases where the permitted payment stablecoin issuer's internal
capital adequacy assessment is significantly deficient in addressing
the capital needs of the stablecoin issuer to ensure ongoing
operations, the OCC is proposing a process to impose an individual
additional capital or backstop requirement on the permitted payment
stablecoin issuer. This process is permitted by section 4(a)(4)(B)(i)
of the GENIUS Act (12 U.S. 5903(a)(4)(B)(i)) and is generally
consistent with the OCC's process to impose individual minimum capital
ratios for national banks. Uninsured national trust banks that are also
permitted payment stablecoin issuers would be subject to both the
individual minimum capital ratio framework and the proposed individual
additional capital or backstop requirement.
The proposed rule includes a list of illustrative examples of when
the OCC may consider imposing an individual additional capital or
backstop requirement, such as when a stablecoin is facing a significant
increase in operational risks, excessive volatility in stablecoin
issuance or redemptions and the permitted payment stablecoin issuer's
management lacks a robust plan to address that volatility, or for
additional risks that the stablecoin issuer is not appropriately
managing or reflecting in the ongoing capital calculation.
Under the proposal, the OCC would notify the permitted payment
stablecoin issuer of the proposed individual additional capital or
backstop requirement, including a justification for that requirement
and a target achievement date. The board and management of the
permitted payment stablecoin issuer generally would have 30 days to
respond to that notice. The OCC may change this time period, as
appropriate, based on the condition of the permitted payment stablecoin
issuer. For example, the time period may be shortened due to the
severity of the underlying issues and need for additional capital or
backstop. After the response period, the OCC would issue a final
decision establishing an individual additional capital or backstop
requirement for that permitted payment stablecoin issuer, which would
remain in effect until modified or rescinded by the OCC. The decision
may require the permitted payment stablecoin issuer to develop and
submit to the OCC, within a specified time period, an acceptable plan
to reach the additional capital or backstop requirement established for
the permitted payment stablecoin issuer. If, after the OCC renders its
decision, there is a significant change in the circumstances that
materially affects the permitted payment stablecoin issuer's capital
adequacy or its ability to reach the required capital or backstop
requirement, the permitted payment stablecoin issuer may request, or
the OCC may propose to the permitted payment stablecoin issuer, a
change in the additional capital or backstop requirement for the
permitted payment stablecoin issuer, the date when the minimum must be
achieved, or the permitted payment stablecoin issuer's plan (if
applicable). The OCC may decline to consider proposals that are not
based on a significant change in circumstances or that are repetitive
or frivolous. Pending a decision on reconsideration, the OCC's original
decision and any plan required under that decision shall continue in
full force and effect.
4. Proposed Adjustments to the Bank Capital Rule (12 CFR Part 3)
Section 4(a)(4)(C)(iii) of the GENIUS Act (12 U.S.C.
5903(a)(4)(C)(iii)) specifies that for stablecoin issuers owned by
insured depository institutions or depository institution holding
companies, the appropriate Federal banking agency (as defined in 12
U.S.C. 1813(q)) cannot require an insured depository institution or
depository institution holding company that is consolidated with a
permitted payment stablecoin issuer to hold any
[[Page 10244]]
amount of regulatory capital with respect to such permitted payment
stablecoin issuer and its assets and operations in excess of the
capital that such permitted payment stablecoin issuer must maintain
under the capital regulations promulgated under the GENIUS Act.
Therefore, for regulatory capital purposes, the OCC is proposing to
amend 12 CFR part 3 to specify that an insured national bank or Federal
savings association that owns a permitted payment stablecoin issuer
consolidated under GAAP must deconsolidate the permitted payment
stablecoin issuer for regulatory capital purposes. The insured national
bank or Federal savings association must deduct any interest in
retained earnings of the permitted payment stablecoin issuer from the
insured national bank's or Federal savings association's common equity
tier 1 capital. This amount would also be deducted from the asset
reflecting the investment in the subsidiary for risk-based and leverage
capital calculations. This interest reflects the insured national
bank's or Federal savings association's share of retained earnings of
the permitted payment stablecoin issuer that have not been paid out as
dividends, and the deduction ensures that the same amount would not
count as capital at both the permitted payment stablecoin issuer and
its parent insured national bank or Federal savings association. Once
earnings from the subsidiary are paid as dividends to the parent
national bank or Federal savings association, those funds are available
for general uses of the parent bank and no longer count as capital of
the stablecoin issuer. Finally, any remaining assets associated with
the permitted payment stablecoin issuer (after deducting its share of
retained earnings), such as investments in or intercompany receivables
from a permitted payment stablecoin issuer, would be excluded when
calculating the insured national bank's or Federal savings
association's standardized total risk-weighted assets, advanced
approaches risk-weighted assets, average total consolidated assets, and
total leverage exposure, as applicable. To the extent that a subsidiary
permitted payment stablecoin issuer incurs net losses, there would be
no adjustment to increase its parent national bank or Federal savings
association's assets or retained earnings to offset those losses, so as
to not overstate the resources and financial condition of the parent.
As proposed, this deconsolidation and deduction approach would
ensure that any assets and capital associated with the permitted
payment stablecoin issuer are not double-counted when included in risk-
based or leverage capital ratio calculations at the parent insured
national bank or Federal savings association, and that any retained
earnings of the permitted payment stablecoin issuer are not double-
counted as capital that can be used by the parent insured national bank
or Federal savings association.
As proposed, the rule would allow uninsured national trust banks to
issue payment stablecoins directly. Currently, uninsured national trust
banks are subject to the full requirements of 12 CFR part 3, including
risk-based and leverage capital ratios. However, the capital required
under those measures may be significantly in excess of capital that
would be required for other types of permitted payment stablecoin
issuers under the proposal. In order to establish parity among all
types of permitted payment stablecoin issuers, the OCC is proposing to
permit uninsured national trust banks that issue stablecoins to elect
to follow the proposed capital requirements in part 15 and not
calculate or comply with the minimum capital requirements in part 3. As
an alternative, the OCC is also considering bifurcating the operations
of the payment stablecoin from other operations of the national trust
bank, then applying part 15 capital requirements to the payment
stablecoin issuance business and part 3 capital requirements to the
other business operations. However, the complexity in dividing or
allocating assets and expenses between the business lines may make this
impractical to operationalize.
Furthermore, to promote parity among uninsured national trust
banks, whether or not they issue payment stablecoins, the OCC is
proposing to allow any uninsured national trust bank to similarly elect
to follow the proposed minimum capital requirements calculated under
part 15 instead of those under part 3. As acknowledged in OCC Bulletin
2007-21, the leverage and risk-based capital ratios in 12 CFR part 3
generally are not optimal measures of capital adequacy for national
trust banks. Under the proposed rule, a national trust bank seeking to
follow the part 15 minimum capital requirements instead of the part 3
minimum capital requirements would submit a notice to the OCC
indicating its election. The election would become effective 30 days
after OCC receipt, unless the OCC objects in writing for good cause
within that timeframe. After electing the part 15 capital requirements,
a national trust bank subsequently could revert to following the
relevant capital measures in part 3 for good cause and with approval of
the OCC.
Under the proposal, an uninsured national trust bank would continue
to follow the criteria and definitions for capital instruments in 12
CFR part 3, subpart C, including any adjustments or deductions. The OCC
is proposing this approach to not create disruptions for shareholders
or the bank based on the slightly different requirements for capital
instruments between 12 CFR part 3, subpart C, and Sec. 15.40 of the
proposed rule. In addition, allowing uninsured national trust banks to
opt-out of regulatory capital deductions, such as those for mortgage
servicing assets or goodwill, may create an unlevel competitive
landscape with national banks that have those assets subject to
deduction under part 3. As an alternative, the OCC is considering
grandfathering any existing regulatory capital instruments issued by
uninsured national trust banks that elect to follow the minimum capital
requirement in proposed Sec. 15.41 and otherwise comply with proposed
Sec. 15.40 going forward.
5. Proposed Amendment to Part 6
When calculating total assets for prompt corrective action purposes
under 12 CFR part 6, the definition of total assets in Sec. 6.2 of the
rule specifies that certain assets deducted from capital are also
deducted from total assets. Consistent with section 4(a)(4)(C)(iii) of
the GENIUS Act (12 U.S.C. 5903(a)(4)(C)(iii)) and the deductions and
adjustments proposed to 12 CFR part 3, the OCC is proposing a
conforming amendment to also incorporate the deductions related to an
insured national bank's or Federal savings association's ownership of a
permitted payment stablecoin issuer when calculating total assets under
12 CFR part 6. As part 6 only applies to insured depository
institutions, no adjustments are necessary for uninsured national trust
banks.
F. Proposed Amendments to Part 8
1. Background
The OCC funds the activities it undertakes to carry out its
supervisory activities through assessments on institutions regulated by
the OCC.\102\ The OCC is authorized to collect assessments, fees, and
other charges to meet the agency's expenses in carrying out authorized
activities.\103\ In setting
[[Page 10245]]
assessments, the Comptroller has broad authority to consider variations
among institutions, including the nature and scope of the activities of
an institution, the amount and type of assets that the institution
holds, the financial and managerial condition of the institution, and
any other factor the Comptroller determines appropriate.\104\
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\102\ The National Bank Act authorizes the OCC to impose
assessments on national banks and Federal branches and agencies. See
12 U.S.C. 16, 481, and 482. The Home Owners' Loan Act, as amended,
authorizes the OCC to impose assessments on Federal savings
associations. See 12 U.S.C. 1467.
\103\ See 12 U.S.C. 16, 481 and 482.
\104\ 12 U.S.C. 16. See also 12 U.S.C. 1467(a) (providing that
the Comptroller has the authority to recover costs of examination of
Federal savings associations ``as the Comptroller deems necessary or
appropriate'').
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The OCC collects assessments from OCC-supervised institutions
pursuant to 12 CFR part 8.\105\ Under current part 8, the base
assessment for each national bank and Federal savings association is
calculated using a table with eleven categories, or brackets, each of
which comprises a range of asset-size values. The formula used to
calculate an assessment for each national bank and Federal savings
association is the sum of a base amount, which is the same for every
institution in its asset-size bracket, plus a marginal amount, which is
computed by applying a marginal assessment rate to the amount in excess
of the lower boundary of the asset-size bracket.\106\ The marginal
assessment rate declines as asset size increases, reflecting economies
of scale in the OCC's supervision activities.\107\
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\105\ Current part 8 covers assessments for national banks,
Federal savings associations, and Federal branches and Federal
agencies. For clarity, proposed subpart A as discussed below will
cover the same institutions.
\106\ 12 CFR 8.2(a).
\107\ See 12 CFR 8.8(a) and notices published by the OCC
thereunder.
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The OCC's annual Notice of Office of the Comptroller of the
Currency Fees and Assessments (Notice of Fees) sets forth the marginal
assessment rates applicable to each asset-size bracket for each
year,\108\ as well as other assessment components and fees.\109\
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\108\ 12 CFR 8.2(a)(5)(i).
\109\ 12 CFR 8.2(a)(4).
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The OCC has determined that collecting assessments in connection
with the GENIUS Act activities of OCC-supervised institutions is
necessary and appropriate to facilitate the OCC's functions under the
Act and conforms with the agency's assessment authorities. The OCC's
supervisory responsibilities under the Act include licensing and
registration decisions for certain nonbank payment stablecoin issuers,
and monitoring compliance with reserve requirements and other
applicable laws and regulations relating to stablecoin activities. As
discussed below, the OCC proposes to amend part 8 to create new
subparts A and B. Subpart A will consist of existing provisions
relating to the assessment of national banks and Federal savings
associations, with proposed amendments to clarify how these provisions
will be applied with respect to new activities that these institutions
undertake pursuant to the GENIUS Act. Subpart A applies principally to
national banks and Federal savings associations. This includes
assessments related to payment stablecoin issuing uninsured national
banks--a type of Federal qualified payment stablecoin issuer--and
payment stablecoin issuing subsidiaries of insured national banks and
Federal savings associations (i.e., insured depository institutions).
Proposed subpart B sets out the proposed structure for assessments on
institutions newly subject to OCC jurisdiction under the GENIUS Act
that are not subject to assessments under subpart A--i.e., nonbank
entities and certain State qualified payment stablecoin issuers. This
reorganization of part 8 reflects the fact that the powers and
structures of the institutions subject to OCC supervision solely under
the GENIUS Act will often differ from that of the entities to which the
current part 8 applies.
2. Proposed Subpart A--Assessment of National Banks and Federal Savings
Associations
The OCC proposes to establish a new subpart A, which will
incorporate the existing provisions of part 8 with targeted
modifications to address assessments for GENIUS Act-related activities
in which national banks and Federal savings associations may engage.
The agency preliminarily concludes that, with the modifications
discussed herein, the existing assessments regime for national banks
and Federal savings associations will adequately and appropriately
ensure that the OCC funds the activities it undertakes to carry out its
statutory obligations under the GENIUS Act with respect to the
supervision of these institutions. As a reflection of this, the
proposed rule would amend Sec. 8.1 to add 12 U.S.C. 5901 et seq., the
GENIUS Act, as an authority pursuant to which the OCC imposes
assessments on permitted stablecoin issuers for GENIUS Act-related
activities. The OCC broadly seeks comment on its preliminary
determination that the existing, asset-based structure used to measure
assessments--modified in the manner proposed below--will adequately and
appropriately reflect the impact of the newly authorized activities on
the OCC's supervisory resources.
a. Section 8.2--Semiannual Assessment
Under existing Sec. 8.2, the OCC collects assessments for national
banks, Federal savings associations, and Federal branches and agencies
on a semiannual basis, with fees due by March 31 and September 30
(payment due dates) of each year for the six-month period beginning on
January 1 and July 1 before each payment due date.\110\ Currently, each
semiannual assessment is based on the total consolidated assets shown
in the institution's most recent ``Consolidated Reports of Condition
and Income'' (Call Report) preceding the payment date.\111\ Section 8.2
and the Table included therein set forth methodologies and rates used
to calculate the semiannual assessment paid by each national bank and
Federal savings association. The OCC proposes several adjustments to
current Sec. 8.2 to account for the GENIUS Act-related activities of
national banks and Federal savings associations.
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\110\ 12 CFR 8.2(a) and 8.2(b)(1).
\111\ 12 CFR 8.2(a)(5)(i) and 8.2(b)(3).
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First, the OCC proposes special rules governing the treatment of
assets attributable to minimum stablecoin reserve assets under 12
U.S.C. 5903. Under proposed Sec. 8.2(e)(1), to the extent the assets
reported by the national bank or Federal savings association on its
Call Report reflect the minimum stablecoin reserve assets that a
stablecoin issuer must hold under 12 U.S.C. 5903, the semiannual
assessment for such institution would be calculated in two parts. The
OCC first would use the existing formula set forth under Sec. 8.2(a)
to determine the institution's semiannual assessment attributable to
assets other than those reflecting minimum stablecoin reserve assets.
The OCC next would apply the same formula to those assets reflecting
minimum stablecoin reserve assets, except that it would reduce the
resulting amount by thirty-five percent, or by such other percentage
(up to fifty-five percent) that the OCC may deem appropriate for
minimum stablecoin reserves held by national banks and Federal savings
associations, based on its experience supervising stablecoin issuers.
The OCC would publish the percentage reduction deemed appropriate for
minimum stablecoin reserve assets on an annual basis in the Notice of
Fees. An institution's semiannual general assessment fee would be the
sum of combining the two figures above.
The proposed discounted assessment for minimum stablecoin reserve
assets reflects the OCC's judgment that the cost
[[Page 10246]]
of supervising non-custodial GENIUS Act-related activities is likely to
be meaningfully lower than the cost of supervising more traditional
activities conducted by national banks and Federal savings
associations. The GENIUS Act limits the stablecoin-related activities
in which issuing institutions may engage, and certain of these newly
authorized GENIUS Act-related activities may present lower risks to
participating institutions and the Federal banking system than certain
traditional banking activities. Notably, the GENIUS Act significantly
restricts the composition of, and the permissible activities in
connection with, required stablecoin reserves. The OCC preliminarily
concludes that these limitations warrant treating stablecoin reserve
assets differently for assessment purposes than existing, on-balance
sheet assets attributable to more traditional banking activities, on
which the current Sec. 8.2(a) assessment formula is based.
While the agency is not yet able to precisely determine the
appropriate discount for stablecoin reserve assets relative to assets
attributable to more traditional banking activities, the agency
believes that a baseline 35 percent discount would appropriately
reflect the expected marginal increase in the agency's overall
supervisory costs attributable to GENIUS Act-related activities.\112\
To determine an appropriate baseline, the OCC calculated the median
discount provided on a per-asset basis to all custodial assets under
existing Sec. 8.6(c) relative to the median per-asset assessment
charge on non-custodial assets under existing Sec. 8.2(a). The agency
based its discount on this calculation because it reflects differences
in the complexities of OCC supervisory activities associated with
traditional custodial and non-custodial banking activities.
Recognizing, however, that GENIUS Act-related activities are likely
more complex than traditional custodial banking activities--and, in
turn, will likely impose a meaningfully greater economic impact on the
OCC's overall supervisory burden--the agency determined it would be
appropriate to set the proposed discount for required stablecoin
reserve assets at an amount equal to approximately half of the existing
median discount assessed on custodial assets under Sec. 8.6(c).
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\112\ The OCC recognizes that national banks and Federal savings
associations issuing stablecoins (in the case of an insured
depository institution, through a subsidiary) may hold on-balance
sheet certain other assets attributable to GENIUS Act-related
activities. The agency considered whether to apply a reduced rate to
these additional assets but preliminarily concludes that the
baseline 35 percent discount proposed on stablecoin reserve assets
suffices to appropriately reflect the expected marginal increase in
the agency's overall supervisory costs attributable to GENIUS Act-
related activities.
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The OCC considered whether to adopt a larger baseline discount for
required stablecoin reserve assets and recognizes that it may be
appropriate over time for the agency to discount assessments on
required stablecoin reserve assets by more than the baseline 35
percent. However, the OCC expects that the agency will need to commit
more resources to supervising GENIUS Act-related activities in the
first several years following passage of the GENIUS Act as institutions
and the OCC adapt to the exercise and supervision of new GENIUS Act
powers. Additionally, the OCC anticipates that the new powers granted
under the GENIUS Act may result in many new de novo-chartered
institutions, which typically require heightened supervision in the
early years of such institutions. To address potential differences in
the OCC's immediate- and longer-term supervisory commitments in
connection with GENIUS Act-related activities, the proposed rule would
provide the OCC with sufficient flexibility to annually adjust the
discounted rate to reflect changes in the overall share of the
supervisory burden attributable to the GENIUS Act-related activities of
national banks and Federal savings associations.
The OCC separately considered whether it should extend the proposed
discount to over-collateralized reserve assets--i.e., reserve assets
that a stablecoin issuer voluntarily holds in excess of the minimum
stablecoin reserve assets it must hold under 12 U.S.C. 5903. The agency
similarly considered whether to exclude reserve assets attributable to
voluntary over-collateralization from assessment altogether. Extending
the proposed discount to over-collateralized reserve assets--or
excluding them altogether from assessment--could be appropriate,
especially if a different course were likely to meaningfully
disincentivize voluntary over-collateralization. However, the agency
lacks reliable information or evidence to suggest that assessing
voluntary over-collateralized stablecoin reserve amounts at
undiscounted rates will meaningfully influence an issuer's business
judgment on whether and to what extent it should voluntarily over-
collateralize its on-balance sheet stablecoin reserves. Additionally,
while the OCC does not wish to disincentivize voluntary over-
collateralization, it is concerned that extending the proposed discount
to over-collateralized reserves (or excluding them altogether from
assessment) may encourage some institutions to mischaracterize the
status of certain on-balance sheet assets as reserves to minimize their
overall assessment. The OCC therefore preliminarily concludes that
voluntary over-collateralized reserve assets should be assessed without
any discount.
Second, the OCC proposes to clarify in Sec. 8.2(e)(2) that if for
any reason a national bank's or Federal savings association's total
assets reported on that institution's Call Report does not reflect the
minimum stablecoin reserve assets that a stablecoin issuer must hold
under 12 U.S.C. 5903 and the proposed implementing regulations, the OCC
shall increase the assessment calculated under the subsection. The
increased assessment amount would reflect the difference between the
amount of stablecoin reserve assets reflected on the institution's Call
Report and the minimum required stablecoin reserve assets for the
amount of outstanding stablecoin issuances that the institution reports
pursuant to 12 CFR 15.14(i). While the OCC anticipates that Call
Reports of issuing national banks and Federal savings associations will
reflect all non-custodial assets attributable to stablecoins, including
assets held in reserve to satisfy the institution's obligations under
12 U.S.C. 5903, proposed Sec. 8.2(e)(2) would permit the OCC to
address any potential under-assessment resulting from an institution's
failure to ensure that it holds sufficient stablecoin reserve assets to
meet its obligations under 12 U.S.C. 5903 and these proposed
implementing regulations.\113\ To effectuate this new provision, the
OCC anticipates developing reporting requirements separate from Calls
Reports to ensure it has sufficient information to isolate assets
reported on Call Reports attributable to stablecoin reserve assets held
by an issuing national bank or Federal savings association.
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\113\ Additionally, if a permitted stablecoin issuer's actual
reserve amount is less than its required reserve amount, the OCC
anticipates that the permitted stablecoin issuer may incur
additional fees and charges under proposed revisions to Sec. 8.6
associated with (among other things) examinations conducted to
understand and address the institution's reserve asset deficiencies.
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Third, the OCC proposes amending Sec. 8.2(b), which addresses the
semiannual assessment imposed on Federal branches and agencies. As
amended, Sec. 8.2(b)(2) provides that the semiannual assessment
imposed on Federal branches and agencies shall be computed using the
same methodology and the same rates as national banks
[[Page 10247]]
and Federal savings associations, though clarifying that only the total
domestic assets of the Federal branch or agency will be subject to the
assessment under Sec. 8.2. This clarification reflects that the OCC
ordinarily supervises only the domestic operations of Federal branches
and agencies. The agency proposes language making clear that semiannual
assessments for all institutions subject to part A will reflect all
assets attributable to GENIUS Act-related activities (including minimum
reserve assets), irrespective of whether those assets would be
categorized as ``domestic'' assets.
Fourth, the OCC proposes to amend Sec. 8.2(c) to eliminate that
subsection's additional assessment for independent credit card national
banks and Federal savings associations where the on-balance sheet
assets attributable to non-custodial GENIUS Act-related activities of
such institutions make the additional assessment unnecessary. An
``independent credit card'' national bank or Federal savings
association is an institution that is (i) ``engaged primarily in credit
card operations;'' and (ii) not affiliated with a ``full-service''
national bank or Federal savings association.\114\ An institution is
``engaged primarily in credit card operations'' if it is either a bank
described in section 2(c)(2)(F) of the Bank Holding Company Act, or if
the ratio of the institution's total gross receivables attributable to
its balance sheet assets exceeds 50 percent.\115\ A ``full service''
institution is one that generates more than 50 percent of its income
``from activities other than credit card operations or trust activities
and is authorized according to its charter to engage in all types of
permissible banking activities.'' \116\
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\114\ 12 CFR 8.2(c)(3)(vi) and (vii).
\115\ 12 CFR 8.2(c)(3)(iii).
\116\ 12 CFR 8.2(c)(3)(iv) and (v) (emphasis added).
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The OCC originally imposed the additional assessment in Sec.
8.2(c), and the corresponding 50 percent threshold in the relevant
definitional term, upon finding that the magnitude and the complexity
of the business of independent credit card national banks and Federal
savings associations were not fully reflected by the volume of assets
reported on those institutions' balance sheets as of a particular
date.\117\ An independent credit card national bank's or Federal
savings association's balance sheet was not, by itself, generally a
meaningful measure of the resources that the OCC needed to expend to
supervise these types of institutions, nor a fair measure of the value
of the national bank charter to these enterprises. The OCC therefore
adopted an additional assessment under Sec. 8.2(c) for independent
credit card national banks and Federal savings association based on
these institutions' ``receivables attributable'' (i.e., the total
amount of outstanding balances due on credit card accounts owned by the
institution) as the measure of the volume of the institution's
business. The additional assessment under Sec. 8.2(c) ensures that
assessments imposed on independent credit card national banks and
Federal savings associations represent their fair share of the OCC's
overall supervisory expenses.\118\
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\117\ 66 FR 29890, 29890 (June 1, 2001).
\118\ Id.
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The OCC preliminarily concludes that the justification for imposing
an additional assessment under Sec. 8.2(c) is no longer present where
the ratio of an institution's total gross receivables attributable to
its balance sheet assets no longer exceeds 50 percent after accounting
for on-balance sheet assets attributable to GENIUS Act-related
activities. In such instances, although the independent credit card
institution may not qualify as a ``full service'' institution, the
agency expects that the additional on-balance sheet assets attributable
to the institution's GENIUS Act-related activities should suffice to
ensure that the institution's assessment under Sec. 8.2(a) adequately
reflects the magnitude and complexity of the institution's overall
business and represents its fair share of the OCC's overall supervisory
expenses. The OCC therefore proposes to amend Sec. 8.2(c) to provide
that an independent credit card national bank or Federal savings
association is not subject to an additional assessment under that
subsection if the ratio of its total gross receivables attributable to
its balance sheet assets no longer exceeds 50 percent after accounting
for on-balance sheet assets attributable to GENIUS Act-related
activities. The agency further proposes to amend Sec. 8.2(c) to
require independent credit card national banks and Federal savings
associations to report data related to their assets attributable to
activities permitted under 12 U.S.C. 5901 et seq. to the OCC
semiannually at a time specified by the OCC, as Sec. 8.2(c)(4)
currently requires for data related to off-balance sheet receivables,
to ensure accurate accounting in calculating assessments.
b. Section 8.6 Fees for Special Examinations and Investigations
Section 8.6 is generally designed to allow the OCC to impose
assessments on national banks, Federal branches or agencies of foreign
banks, Federal savings associations, and related entities for
supervisory expenses which, due to the complexity of the attributes of
the underlying activity, are not adequately offset by the base
assessment under Sec. 8.2. The OCC proposes the following revisions to
the existing Sec. 8.6 to appropriately reflect the agency's increased
supervisory activities relating to the GENIUS Act.
Specifically, the OCC proposes to revise existing Sec. 8.6(c) to
eliminate that subsection's additional assessment for ``independent
trust'' national banks and Federal savings associations where the on-
balance sheet assets attributable to the non-custodial GENIUS Act-
related activities of such institutions make the additional assessment
unnecessary. Section 8.6(c) currently imposes an additional assessment
on ``independent trusts'' in connection with their off-balance sheet
``fiduciary and related assets.'' The OCC adopted existing Sec. 8.6(c)
upon finding that--unlike ``full service'' institutions that may
exercise trust powers but that also engage in sufficient non-custodial
activities--the limited balance sheet assets of ``independent trusts''
resulted in assessments under Sec. 8.2(a) that did not constitute a
fair representation of the complexity of their operations, or the
extent of the OCC's supervisory activities related to their
operations.\119\ An ``independent trust'' is an institution that (i)
has trust powers, (ii) does not primarily offer full-service banking,
and (iii) is not affiliated with a full-service national bank or
Federal savings association.\120\ A ``full-service'' institution is one
that (i) generates more than 50 percent of its interest and non-
interest income from activities other than credit card operations or
trust activities; and (ii) is authorized according to its charter to
engage in all types of permissible banking activities or activities
permissible for Federal savings associations.\121\
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\119\ 65 FR 75859, 75860 (December 5, 2000).
\120\ 12 CFR 8.6(c)(3)(v) and (vi).
\121\ 12 CFR 8.2(c)(3)(iii) and (iv).
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The OCC preliminarily concludes that the justification for imposing
an additional assessment under Sec. 8.6(c) no longer exists where an
independent trust generates more than 50 percent of its interest and
non-interest income from activities other than credit card operations
or trust activities, after accounting for on-balance sheet assets
attributable to GENIUS Act-related activities. In such instances,
although the independent trust may not qualify as a ``full service''
institution, the agency expects that the additional on-balance
[[Page 10248]]
sheet assets attributable to its GENIUS Act-related activities should
suffice to ensure that the institution's assessment under Sec. 8.2(a)
adequately reflects the magnitude and complexity of the institution's
overall business and represents its fair share of the OCC's overall
supervisory expenses. The OCC therefore proposes to amend Sec. 8.6(c)
to provide that an independent trust national bank or Federal savings
association is not subject to an additional assessment under that
subsection if it generates more than 50 percent of its interest and
non-interest income from activities other than credit card operations
or trust activities, after accounting for on-balance sheet assets
attributable to GENIUS Act-related activities. The OCC further proposes
to amend Sec. 8.6(c) to require independent trust institutions to
report their interest and non-interest income from activities other
than credit card operations or trust activities at a time specified by
the OCC, to ensure accurate accounting in calculating assessments.
3. Proposed Subpart B--Assessment of Certain Other Institutions
The OCC proposes amending part 8 to include a new subpart B,
setting forth the methodology the agency proposes to impose assessments
on the following institutions, to the extent they are subject to the
OCC's supervisory jurisdiction under the GENIUS Act: (i) nonbank
Federal qualified payment stablecoin issuers; (ii) certain Foreign
payment stablecoin issuers; and (iii) certain State qualified payment
stablecoin issuers. The OCC proposes to assess these institutions in
connection with the agency's supervisory authority under 12 U.S.C. 482,
which authorizes the Comptroller to ``impose and collect assessments,
fees, or other charges as necessary or appropriate to carry out the
responsibilities of the office of the Comptroller.''
Proposed Sec. 8.9 would clarify that the OCC would impose
assessments on certain Federal, Foreign, and State qualified payment
stablecoin issuers for GENIUS Act-related activities pursuant to the
authority contained in 12 U.S.C. 93a, 481, 482, and 5901 et seq.
Proposed Sec. 8.10 sets forth the OCC's methodology for the primary
assessment of GENIUS Act-related activities of the institutions
described therein. Proposed Sec. 8.11 sets forth the OCC's methodology
for separately assessing certain of those institutions in connection
with their GENIUS-Act permitted custodial and safekeeping activities.
Proposed Sec. 8.12 describes special fees and assessments in
connection with the GENIUS Act-related activities of institutions
covered under subpart B. Finally, proposed Sec. 8.13 covers the
payment of interest on delinquent assessments and examination and
investigation fees. The OCC broadly seeks comment on proposed subpart
B. As discussed below, the agency considered several alternative
methods for imposing assessments on institutions covered under subpart
B. The OCC seeks comment on these and other alternatives.
a. Proposed Sec. 8.10 Semiannual Assessment for Certain Institutions
Section 8.10 as proposed would establish the primary assessment for
nonbank Federal qualified payment stablecoin issuers, certain Foreign
payment stablecoin issuers, and State qualified payment stablecoin
issuers subject to 12 U.S.C. 5903(d) (except to the extent such issuer
remains solely supervised by a State payment stablecoin
regulator).\122\ Proposed Sec. 8.10(a) in general incorporates the
current structure and asset-based formula used to impose assessments on
national banks and Federal savings associations under Sec. 8.2(a), and
includes the same percentage-based assessment reduction for minimum
stablecoin reserve assets that the agency proposes under Sec.
8.2(e)(1), discussed above. Consistent with the agency's treatment of
national banks and Federal savings associations, Sec. 8.10(a) would
also impose a semiannual assessment schedule. In addition to ensuring
consistency across all categories of supervised institutions, a
semiannual assessment schedule may be especially prudent for those
institutions subject to proposed 8.10, given that stablecoin reserve
assets--the primary asset for many of the subject institutions--may
experience significant fluctuation over the course of a year as
issuance and transaction volumes change.
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\122\ State Qualified Payment Stablecoin Issuers with
consolidated total outstanding issuances of not more than $10
billion may opt for regulation under a State-level regulatory regime
under 12 U.S.C. 5903(c). However, when a State chartered depository
institution that is a State Qualified Payment Stablecoin Issuer
exceeds a threshold of $10 billion consolidated total outstanding
issuance, not later than 360 days after reaching such threshold, it
transitions to the Federal regulatory framework of its primary
Federal payment stablecoin regulator, which is administered by the
State payment stablecoin regulator and the primary Federal payment
stablecoin regulator acting jointly. Similarly, when a non-
depository State Qualified Payment Stablecoin Issuer exceeds a
threshold of $10 billion consolidated total outstanding issuance,
not later than 360 days after reaching such threshold, it
transitions to the Federal regulatory framework of the OCC,
administered by the relevant State payment stablecoin regulator and
the OCC acting in coordination. This means that some State Qualified
Payment Stablecoin Issuers will be subject to the OCC's regulatory
framework administered by the relevant State payment stablecoin
regulator and the OCC acting jointly or in coordination.
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To ensure the annual assessment of an institution subject to
proposed Sec. 8.10(a) will be in an amount equal to the annual
assessment of a similarly-sized national bank or Federal savings
association under Sec. 8.2(a), the OCC proposes to use the same asset
tiers (Columns A and B) in Table 1 of Sec. 8.10(a) as used in Table 1
of Sec. 8.2(a),\123\ and to publish in its annual Notices of Fees
tier-specific base amounts (Column C) and marginal rates (Column D)
that match those published annually in connection with current Sec.
8.2(a).\124\ Proposed Sec. 8.10(a)(6) likewise would establish the
same two-pronged approach to calculating assessments for the on-balance
sheet assets of institutions subject to that section as proposed in
Sec. 8.2(e)(1).
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\123\ As discussed elsewhere, the OCC's current asset-based
assessment scheme assigns each bank to a bracket based on total
assets. For each bracket, the assessment is a base amount
(representing application of successive marginal rates to the assets
up to the lower threshold of that bracket) plus a marginal rate
applied to amounts within that tier. There are currently eleven
brackets, the thresholds for which are set by regulation. Current
base amounts and marginal rates are published annually in the Notice
of Fees. See 57 FR 22413 (May 28, 1992) (discussing overall
methodology); 73 FR 9012 (February 19, 2008) (establishing current
asset size thresholds). The most recent Notice of Fees can be found
on the OCC's website. See, e.g., OCC Bulletin 2025-21, ``Office of
the Comptroller of the Currency Fees and Assessments: Interim
Calendar Year 2025 Fees and Assessments Structure'' (August 29,
2025), https://www.occ.gov/news-issuances/bulletins/2025/bulletin-2025-21.html.
\124\ Accordingly, consistent with current Sec. 8.2(a),
proposed Sec. 8.10(a)(4) would provide that the OCC may index
marginal rates to adjust for the percentage in the level of prices,
as measured by changes in the Gross Domestic Product Implicit Price
Deflator (GDPIPD) for each June-to-June period. It would similarly
reserve for the agency a degree of discretion to adjust marginal
rates by amounts other than the percentage change in the GDPIPD.
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Specifically, the OCC would use the existing asset-based formula to
first determine the institution's semiannual assessment attributable to
its on-balance sheet assets that do not reflect minimum stablecoin
reserve assets. As noted, the agency anticipates that institutions
subject to proposed Sec. 8.10 will have a limited amount of such
assets on balance sheet. The OCC next would apply the same formula to
those minimum stablecoin reserve assets, except that it would reduce
the resulting amount by 35 percent, or by such other percentage (up to
55 percent) that the OCC may deem appropriate for minimum stablecoin
reserves held by institutions subject to proposed Sec. 8.10, based on
its experience supervising all stablecoin issuers subject to this part.
The OCC would publish the percentage
[[Page 10249]]
reduction deemed appropriate for minimum stablecoin reserve assets on
an annual basis in the Notice of Fees. An institution's semiannual
assessment would be the sum of the two figures described above.
Presently, the OCC relies primarily on Call Reports to calculate
the total consolidated on-balance sheet assets of national banks and
Federal savings associations for purposes of calculating semiannual
assessments under Sec. 8.2(a). Because many institutions subject to
proposed Sec. 8.10 do not presently file Call Reports, proposed Sec.
8.10(a)(5) instead provides that the OCC will base semiannual
assessments on the total consolidated assets shown on the most recent
quarterly report filed by each institution pursuant to proposed Sec.
15.14(i) preceding the payment date. As discussed elsewhere, the OCC
proposes to require all institutions subject to proposed Sec. 8.10 to
file quarterly reports reflecting the total consolidated assets held on
the balance sheet of the institutions. The OCC anticipates that the
asset reporting on these quarterly reports will match the asset
reporting that would otherwise appear on Call Reports if all
institutions subject to proposed Sec. 8.10 were required to file these
reports quarterly.
Similar to proposed amendments in subpart A, proposed Sec.
8.10(a)(6) would include language clarifying that the OCC shall
increase the assessment set forth in Sec. 8.2(a) for any institution
if the assets reported on that institution's quarterly report for any
reason do not reflect the minimum stablecoin reserve assets that a
stablecoin issuer must hold under 12 U.S.C. 5903 and these implementing
regulations. The increase would reflect the difference between the
amount of stablecoin reserve assets reflected on the quarterly report
and the minimum required stablecoin reserve assets for the amount of
outstanding stablecoin issuances that the institution reports. As
discussed earlier, among other things, this proposed subsection would
permit the OCC to address any potential under-assessment resulting from
an institution's failure to ensure that it holds sufficient stablecoin
reserve assets to meet its obligations under 12 U.S.C. 5903 and these
implementing regulations. If a stablecoin issuer's actual reserve
amount is less than its required reserve amount, the OCC anticipates
that the institution may incur additional fees and charges under
proposed Sec. 8.12 associated with (among other things) examinations
conducted to understand and address the stablecoin issuer's reserve
asset deficiencies.
Proposed Sec. 8.10(a) overall reflects the OCC's preliminary
judgment that, as modified here, the existing asset-based approach to
assessing national banks and Federal savings associations--as modified
by this proposal--will best achieve the OCC's objective to recoup the
cost of supervising new classes of institutions under the GENIUS Act in
a fair, efficient, and cost-effective manner. Except as otherwise
described in subpart B, the OCC expects that assessments collected
under proposed Sec. 8.10(a) should appropriately reflect the agency's
anticipated overall expenses relating to supervising the subject
institutions for the activities in which they may engage under 12
U.S.C. 5903(a)(7).
Proposed Sec. 8.10(b), modeled after existing Sec. 8.2(d), would
apply a surcharge to the semiannual assessments for stablecoin issuers
that require increased OCC supervisory resources. Similar to the OCC's
assessment schedule for national banks and Federal savings
associations, the surcharge ensures that fees reflect the increased
cost of supervising stablecoin issuers determined to require
rehabilitation. As the OCC has previously explained, a condition-based
surcharge ensures the OCC has sufficient resources to fund the special
supervisory attention that lower-rated entities require without raising
general assessments; in the absence of such a charge, healthier
entities would in effect subsidize their lower-rated competitors.\125\
The OCC will determine relevant surcharges by multiplying the
semiannual assessment computed in accordance with paragraph (a) by 1.5,
in the case of any institution that was found to require rehabilitation
at its most recent examination; and 2.0 in the case of any institution
that was found to have material financial or operational deficiencies
that threaten the viability of the institution at its most recent
examination prior to December 31 or June 30, as appropriate. This
proposed methodology is intended to operate in the same manner, and on
the same rationale, as the surcharges tied to UFIRS ratings in Sec.
8.2(d). The OCC generally requests information and comment on its
proposed methodology to ensure that assessments for all regulated
entities requiring rehabilitation adequately reflect the increased cost
of supervising those entities.
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\125\ See 62 FR 64135, 64136 (December 4, 1997).
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Finally, proposed Sec. 8.10(c) would clarify that, even if certain
State qualified payment stablecoin issuers are not subject to the
assessment proposed in that section, these institutions still may be
subject to certain other assessments and fees under subpart B. The
GENIUS Act requires the OCC to engage in certain supervisory and
enforcement activities outside the ordinary course of its operations
that are not otherwise accounted for in semiannual assessments
contemplated under subpart B, including the OCC's exercise of certain
enforcement authorities under 12 U.S.C. 5906(e)(2)(A) over certain
State qualified payment stablecoin issuers with consolidated total
outstanding issuances less than $10 billion. Twelve U.S.C.
5903(d)(3)(A) separately requires the OCC to adjudicate waiver requests
from certain State qualified payment stablecoin issuers with
consolidated total outstanding issuances exceeding $10 billion to
remain subject to the sole supervision of their State payment
stablecoin regulators. Proposed Sec. 8.10(c) acknowledges these and
other similar circumstances by clarifying that, while these issuers may
not be subject to the assessments proposed in subpart B, they may still
be subject to fees under proposed Sec. 8.12 in connection with the
OCC's exercise of these and any other authorities relevant to their
operations under the GENIUS Act.
b. Proposed Sec. 8.11 Fees for Certain Institutions Engaged in the
Custodial and Safekeeping Activities Permitted Under 12 U.S.C. 5901 et
seq.
Certain institutions subject to assessments under proposed Sec.
8.10 also would be subject to an additional assessment under proposed
Sec. 8.11 in connection with their participation in custodial or
safekeeping activities permitted under 12 U.S.C. 5901 et seq.
Specifically, proposed Sec. 8.11 would apply to those institutions for
which 50 percent or more of their income is derived from custodial or
safekeeping activities permitted under 12 U.S.C. 5901 et seq. Proposed
Sec. 8.11 is modeled on the existing provisions of Sec. 8.6(c), which
addresses additional assessments imposed upon independent trust
national banks and independent trust Federal savings associations.
Further, as described below, the asset-based assessment formula under
proposed Sec. 8.11 would generally match the formula under existing
Sec. 8.6(c) so that like-sized institutions would be subject to the
same assessment amounts for similar activities under Sec. 8.6(c) and
proposed Sec. 8.11.
Proposed Sec. 8.11 reflects the OCC's preliminary conclusion that
an assessment based solely on an institution's activities covered under
Sec. 8.10--i.e., non-custodial assets--would not adequately reflect
the supervisory burden on the OCC for
[[Page 10250]]
supervising institutions for which 50 percent or more of their income
is derived from the custodial or safekeeping activities permitted under
12 U.S.C. 5901 et seq. This preliminary finding is consistent with the
agency's longstanding position that chartered institutions should be
subject to an assessment under Sec. 8.6(c) in connection with their
fiduciary and related assets, in addition to an assessment based on
their non-fiduciary activities. As discussed, the OCC adopted existing
Sec. 8.6(c) upon finding that--unlike ``full service'' institutions
that may exercise trust powers but that also engage in sufficient non-
custodial activities--the limited balance sheet assets of ``independent
trusts'' result in assessments under Sec. 8.2(a) that do not
constitute a fair representation of the complexity of their operations,
or the extent of the OCC's supervisory activities related to these
institutions.\126\ The OCC preliminarily concludes that a similar risk
of under-assessment would likely occur for those institutions subject
to proposed Sec. 8.10 that primarily derive their income from
custodial and safekeeping activities. The additional assessment
proposed under proposed Sec. 8.11 will better ensure that such
institutions contribute their fair share of the costs associated with
the OCC's supervisory activities.
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\126\ 65 FR 75860.
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Consistent with the existing assessment formula under Sec. 8.6(c),
assessments for each institution subject to proposed Sec. 8.11 would
include a minimum fee associated with the first $1 billion of assets
attributable to the custodial and safekeeping activities permitted
under the GENIUS Act, and an additional amount associated with assets
in excess of $1 billion. To reflect the similar activities of
institutions subject to proposed Sec. 8.11 and existing Sec. 8.6(c),
the initial fee and the multiplier associated with excess assets would
match the amounts used to assess independent trust national banks and
independent trust Federal savings associations subject to Sec. 8.6(c).
Additionally, consistent with existing Sec. 8.6(c)(1)(iii), and
for the reasons described earlier in connection with proposed Sec.
8.10(b), the OCC proposes to apply a surcharge to the semiannual
assessments for stablecoin issuers subject to proposed Sec. 8.11(b)
determined to require rehabilitation. Specifically, under proposed
Sec. 8.11(b), the agency would adjust the semiannual assessment
computed under Sec. 8.11(a) by applying to it the following multiples:
1.5, in the case of any institution that was found to require
rehabilitation at its most recent examination; and 2.0 in the case of
any institution that was found to have material financial or
operational deficiencies threatening the viability of the institution
at its most recent examination prior to December 31 or June 30, as
appropriate. As discussed above, this proposed methodology is intended
to functionally mirror the distinction made in Sec. 8.6(c)(1)(iii),
whether or not assessed using the UFIRS system. The OCC generally
requests information and comment on its proposed methodology to ensure
that assessments for all regulated entities requiring rehabilitation
are adequately reflected in the increased cost of supervising those
institutions.
c. Proposed Sec. 8.12 Fees for Special Examinations and
Investigations.
Section 8.12 proposes fees for special examinations and
investigations the OCC would undertake with respect to certain
institutions covered under subpart B. The fees covered by this section
would be in addition to any fees and charges assessed in connection
with the other sections of subpart B and generally align with the fees
and charges currently imposed on national banks and Federal savings
associations under existing Sec. 8.6. The OCC intends proposed Sec.
8.12 to apply to any institution subject to the OCC's jurisdiction
under 12 U.S.C. 5901 et seq. For example, as discussed earlier, the OCC
anticipates charging fees in connection with the OCC's resolution of a
request for a waiver from a State qualified payment stablecoin issuer
with consolidated total outstanding issuances exceeding $10 billion to
remain subject to the sole supervision of its State stablecoin
regulator pursuant to 12 U.S.C. 5903(d)(3). The OCC also anticipates
charging fees in connection with any instance in which the OCC must
conduct investigations to support its enforcement authority under 12
U.S.C. 5906(e)(2)(A).
Other special examinations or investigations under proposed Sec.
8.12 include, but are not limited to, those in connection to (i)
supervision or enforcement related activities described in 12 U.S.C.
5905; (ii) activities related to examining affiliates of institutions
subject to subpart B; and (iii) activities related to 12 CFR part 5.
d. Proposed Sec. 8.13 Payment of Interest on Delinquent Assessments
and Examination and Investigation Fees
Proposed Sec. 8.13 is modeled after and does not differ materially
from existing Sec. 8.7. The proposed Sec. 8.13 would cover the
payment of interest on delinquent assessment and examination and
investigation fees by each Federal, Foreign, or State payment
stablecoin issuer under OCC jurisdiction for purposes of the GENIUS
Act. The OCC preliminary concludes that provisions covering the payment
of interest on delinquent assessment and examination and investigation
fees from these institutions should match the existing provisions
covering payment of interest on delinquent assessment and examination
and investigation fees that currently govern national banks and Federal
savings associations, although it seeks comment and information on any
potential justifications to treat the respective institutions
differently.
G. Proposed Amendments to Part 19
The OCC is proposing several revisions to the rules of practice and
procedure for adjudicatory proceedings in 12 CFR part 19 to incorporate
the Act's procedural requirements with respect to permitted payment
stablecoin issuers.
Section 6(b) of the GENIUS Act (12 U.S.C. 5905(b)) requires the OCC
to follow certain procedures when bringing an enforcement action or
imposing civil money penalties against a permitted payment stablecoin
issuer for violations of the GENIUS Act, any regulation or order issued
under the Act, or any condition imposed in writing between the OCC and
permitted payment stablecoin issuer.
Specifically, section 6(b)(4)(A) of the GENIUS Act (12 U.S.C.
5905(b)(4)(A)) requires the OCC to comply with the procedures set forth
in paragraphs (b) and (e) of section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818) if the OCC identifies a violation or attempted
violation of the Act or makes a determination with respect to the
enforcement authorities enumerated at sections 6(b)(1) through (3) of
the Act.\127\ Similarly, section 6(b)(4)(D) of the GENIUS Act (12
U.S.C. 5905(b)(4)(D)) permits the OCC to follow the procedures in
section 8(c) of the Federal Deposit Insurance Act when the OCC issues a
temporary cease-and-desist order.
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\127\ Section 6(b)(1) through (3) of the Act give the OCC
authority to suspend or revoke the registration of a permitted
payment stablecoin issuer, initiate cease-and-desist proceedings,
and remove and prohibit institution-affiliated parties.
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Section 6(b)(5)(D) of the GENIUS Act (12 U.S.C. 5905(b)(5)(D))
clarifies that any civil money penalty imposed under the Act may be
assessed and collected by the OCC pursuant to the procedures set forth
in section 8(i)(2) of the Federal Deposit Insurance Act.
Consistent with the GENIUS Act, the OCC proposes to revise Sec.
19.1 to clarify
[[Page 10251]]
that the rules of practice and procedure in part 19 apply to the
following proceedings: suspension or revocation of registration, cease-
and-desist, temporary cease-and-desist, removal and prohibition, or
civil money penalties under section 6 of the GENIUS Act (12 U.S.C.
5905). Additionally, the OCC proposes to revise Sec. 19.180 to clarify
that the part 19 procedures for formal investigations apply to formal
investigations initiated by the Comptroller pursuant to section 6 of
the GENIUS Act (12 U.S.C. 5905).
The OCC also proposes several technical revisions. Specifically,
the OCC proposes to revise the definitions of ``institution'' and
``institution-affiliated party'' in Sec. 19.3 to incorporate permitted
payment stablecoin issuers and actions brought pursuant to the Act.
III. Request for Comments
The OCC requests feedback on all aspects of the proposed rule,
including:
Definitions
Question 1: Are the definitions in the proposed rule appropriately
scoped? How should they be improved?
Question 2: Should the OCC define ``acting in concert'' to clarify
the term ``principal shareholder?'' For example, the OCC could define
the term to mean (1) knowing participation in a joint activity or
parallel action towards a common goal of acquiring control whether or
not pursuant to an express agreement; or (2) a combination or pooling
of voting or other interests in the securities of an issuer for a
common purpose pursuant to any contract, understanding, relationship,
agreement, or other arrangement, whether written or otherwise. If the
OCC should define the term, should the OCC incorporate any of the
presumptions for acting in concert detailed in 12 CFR 5.50(f)(2)?
Question 3: Is the definition of ``control'' sufficiently clear? If
not, how should the OCC further clarify the term? Should the OCC
expressly incorporate any of the presumptions of control from the Bank
Holding Company Act (or its implementing regulations), adapted to apply
to permitted payment stablecoin issuers? Should the definition of
control incorporate the concept of ``acting in concert?'' Should the
definition incorporate any provisions from the regulations implementing
the Change in Bank Control Act or consolidation under GAAP?
Question 4: The term ``customer'' is broadly defined to mean a
person that purchases (through any consideration) the products or
services of another person. Is the scope of this definition too broad?
With respect to customers of permitted payment stablecoin issuers,
should the definition expressly include only persons with direct
interactions with a permitted payment stablecoin issuer? Alternatively,
should the definition include all downstream payment stablecoin holders
(i.e., not just customers with direct interactions with the permitted
stablecoin issuer)? Please address any significant impact or burden the
proposed definition or contemplated alternative definitions may have or
add given other requirements in the proposed rule, such as the customer
notification requirements in proposed Sec. 15.13. Because the term is
used in several different contexts throughout the proposed rule, should
the definition of ``customer'' be refined with respect to certain
requirements (e.g., customer notification)?
Question 5: Section 2 of the GENIUS Act (12 U.S.C. 5901) does not
define ``depository institution.'' Is the definition of ``depository
institution'' in the proposed rule sufficiently clear? Are there
particular types of institutions for which it would be unclear whether
the type of institution is a depository institution and which agency is
the primary Federal payment stablecoin regulator for the type of
institution? What additional clarifications would be helpful?
Question 6: Is the scope of the term ``digital asset'' sufficiently
clear? If not, how should it be clarified?
Question 7: The proposed rule does not use the term ``digital asset
service provider.'' Is the scope of the term digital asset service
provider under the statute sufficiently clear? If not, how should it be
clarified? Are there specific activities that should be expressly
excluded from digital asset service provider activities, consistent
with the statutory definition? Should additional guidance on the
exclusions from the definition of ``digital asset service provider'' or
the meaning of ``engaging in the business'' of providing digital asset
service provider activities be clarified? If so, how should the OCC
further clarify these terms? Should the OCC clarify that only the
provision of financial services that directly relate to digital asset
issuance would result in an entity becoming a digital asset service
provider?
Question 8: Is the term ``director'' sufficiently clear, including
with respect to Federal branches? How should the OCC further clarify
the term?
Question 9: Is the term ``distributed ledger'' sufficiently clear?
Should the term ``public digital ledger'' be further clarified? What
additional clarifications would be helpful? Should certain permissioned
or semi-permissioned digital ledgers be considered ``public?'' If so,
how should the definition of ``public'' delineate between different
types of permissioned or semi-permissioned blockchains?
Question 10: Is the definition of ``eligible financial
institution'' appropriately scoped? How could the term be further
refined? Are there particular elements of the definition that should be
excluded or should be addressed elsewhere in the proposed rule?
Question 11: Is the definition of ``money'' appropriately scoped?
Should the OCC use the exact language of the statute, instead of using
the proposed definition?
Question 12: Is the term ``nonpublic personal information''
appropriately scoped? How could the term be further refined or
clarified?
Question 13: The term ``outstanding issuance value'' refers to the
total consolidated par value of all of an issuer's payment stablecoins.
Should the definition also include the par value of non-consolidated
affiliates? If so, what changes should be made to the reserve asset
requirements to ensure 1:1 backing across all affiliated entities?
Question 14: Is the term ``payment stablecoin'' sufficiently clear?
If not, how should the definition be amended to provide additional
clarity as to whether a particular stablecoin is a ``payment
stablecoin'' under the Act? Please describe the types of stablecoins
that the OCC should clarify do not meet the definition of a ``payment
stablecoin'' under the Act and therefore would be outside the scope of
the Act's coverage. Should there be additional clarity around what it
means that a payment stablecoin is a digital asset ``that is, or is
designed to be, used as a means of payment or settlement?'' For
example, are there certain settlement scenarios that the OCC should
clarify are not ``designed to be, used as a means of payment or
settlement?''
Question 15: Is the exclusion of a digital asset that ``is a
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'' from the definition of ``payment stablecoin''
sufficiently clear? Should the OCC clarify which tokenized products
this exclusion may apply to?
Question 16: Section 2 of the GENIUS Act (12 U.S.C. 5901) does not
exclude insured shares from the definition of ``payment stablecoin.''
Should insured shares be excluded in the implementing regulations?
[[Page 10252]]
Question 17: Is the term ``permitted payment stablecoin issuer''
sufficiently clear? How should the definition be amended to provide
additional clarity as to whether a particular entity issues a payment
stablecoin and is subject to the requirements of the GENIUS Act?
Question 18: Is the term ``person'' sufficiently clear? Should the
OCC further clarify the definition, including with respect to the
meaning of ``association'' or other components of the definition?
Question 19: Is the term ``private key'' sufficiently clear? How
could the term be further clarified? Should the OCC define the term to
mean the unique alphanumeric sequence that allows an individual to
prove ownership of an account on a distributed ledger, including for
the purpose of transferring a particular unit of a digital asset?
Question 20: Should the definition of ``principal shareholder'' or
any other definitions explicitly incorporate governance instruments
other than securities providing voting rights with respect to the
activities of the issuer? In particular, are there governance
instruments that may not qualify as securities that the OCC should
incorporate or instruments common to partnerships that the OCC should
consider incorporating?
Question 21: Is the term ``senior management'' as used in proposed
part 15 sufficiently clear? Should the OCC define the term, for
example, to include all or a select subset of executive officers?
Question 22: The GENIUS Act does not define ``stablecoin holder.''
Should the OCC define the term? If so, should the OCC define the term
to mean the person that beneficially owns the payment stablecoin?
Should the OCC instead define the term based on possession via digital
wallets or control of cryptographic keys? What considerations relating
to custody should the OCC bear in mind if it chooses to define the
term? What interactions with other requirements in the proposed rule
should the OCC consider if it chooses to define the term?
Question 23: Should the OCC refine the definition of trading
volume? Should the term be limited to trades that occur on exchanges?
Should it include transactions that occur outside of an exchange?
Should the OCC define ``exchange'' for purposes of this definition? If
so, should the OCC define it to mean a person engaged in the business
of making a market in digital assets (including payment stablecoins)?
Should any definition include decentralized exchanges? What impediments
are there to permitted payment stablecoin issuers collecting data
concerning trading volume?
Question 24: Should the OCC define United States customer to mean a
customer that resides in the United States, as proposed, or use a
different definition? For example, should the definition be limited to
United States citizens or include both citizens and residents of the
United States? Should the definition be limited to permanent residents
of the United States?
Activities
Question 25: Are there activities not contemplated in proposed
Sec. 15.10 that permitted payment stablecoin issuers must be able to
engage in for purposes of the GENIUS Act? If so, please describe them
and any appropriate limits for these additional activities.
Question 26: Should the OCC clarify that a permitted payment
stablecoin issuer may retain an asset manager under a separately
managed account under proposed Sec. 15.10(a)(8)?
Question 27: Are there other limits or conditions the OCC should
consider with respect to payment stablecoin issuers acting as principal
or agent with respect to any payment stablecoin? Should the OCC specify
the activities contemplated under the GENIUS Act for which a permitted
payment stablecoin issuer may act as principal or agent in payment
stablecoins under section 16(b) of the Act (12 U.S.C. 5915(b))?
Question 28: Do permitted payment stablecoin issuers need to hold
crypto-assets other than payment stablecoins for other purposes beyond
paying transaction fees or testing a distributed ledger? If so, under
what circumstances would a permitted payment stablecoin issuer need to
hold such assets?
Question 29: Should the final rule include specific provisions
addressing an issuer's holding of non-payment stablecoin crypto-assets
to pay transaction fees, such as limitations on the amount of non-
payment stablecoin crypto-assets that a permitted payment stablecoin
issuer may hold at any time? If so, how should those limits be
calibrated? Should any limit be based on anticipated fees, a percentage
of assets, or be set at a certain value threshold?
Question 30: Should there be any limit on what methods of payment a
permitted payment stablecoin issuer can accept when assessing fees,
including fees associated with the purchasing or redeeming of
stablecoins? Should the final rule include provisions addressing a
permitted payment stablecoin issuer's potential assessment of fees in
crypto-assets other than payment stablecoins and how long issuers can
hold onto such crypto-assets? Are there specific forms of payment
outside of fiat and payment stablecoin that permitted payment
stablecoin issuers will need to accept that the OCC should provide
additional clarity on?
Question 31: Should the OCC include an approval process for the
activities listed in the Section 4(a)(7)(B) of the GENIUS Act (12
U.S.C. 5903(a)(7)(B)), including digital asset service provider
activities and activities incidental to payment stablecoin activities
or digital asset service provider activities?
Question 32: Should the OCC clarify proposed Sec. 15.10(a)(8) by
providing specific examples of activities that directly support the
activities in proposed Sec. 15.10(a)(1) through (4)? Are there
specific examples of activities that directly support the activities in
proposed Sec. 15.10(a)(1) through (4) that should be clarified? Should
the OCC distinguish between what it means for an activity to directly
support the activities in proposed Sec. 15.10(a)(1) through (4), and
therefore, satisfy the test in proposed Sec. 15.10(a)(8) as opposed to
what it means for an activity to be incidental to the activities in
proposed Sec. 15.10(a)(1) through (7) provided in section 4(a)(7)(B)
of the GENIUS Act? Should the OCC provide an approval process related
to digital asset service provider activities and/or incidental
activities?
Question 33: The proposed rule would permit a permitted payment
stablecoin issuer to hold non-payment stablecoin crypto-assets to pay
certain fees (e.g., network fees). Should the rule include an express
limitation on the amount of such crypto-assets that the permitted
payment stablecoin issuer may hold? For example, the rule could provide
that the amount of such crypto-assets may not exceed reasonably
expected near-term demand.
Question 34: Should the OCC explicitly provide that managing
foreign exchange risk is a permissible activity for the issuers of
stablecoins that are not denominated in the United States dollar? If
so, should the OCC include limitations on the activity (e.g., that the
permitted payment stablecoin issuer may not over-hedge its position and
may not use foreign exchange risk management as a pretext to engage in
speculation)? If the OCC permits this activity, what requirements
should the OCC impose to mitigate risks? For example, should there be a
capital add-on for foreign exchange risk?
Question 35: Could the prohibition against paying interest or yield
solely in connection with the holding or use of a permitted payment
stablecoin be clarified? If so, how? Would it be
[[Page 10253]]
helpful to include a de minimis exception to the prohibition to provide
certainty with respect to arrangements that are not designed to violate
the prohibition and that do not have a meaningful economic impact? If
so, is there any specific guidance the OCC should provide on what de
minimis means?
Question 36: Does the presumption with respect to the prohibition
against paying interest or yield solely in connection with the holding,
use, or retention of a permitted payment stablecoin appropriately
address concerns relating to evasion? Is the presumption with respect
to the prohibition against paying interest or yield solely in
connection with the holding, use, or retention of a permitted payment
stablecoin appropriately scoped? Is the presumption sufficiently clear?
How could the presumption be clarified? Should the OCC clarify the
standard of review under which it would consider written materials to
rebut the presumption related to interest or yield and specify whether
the OCC's determination is appealable? Should the OCC propose any safe
harbor for arrangements that the OCC believes do not violate the
statutory prohibition?
Question 37: Should the prohibition on interest and yield in
proposed Sec. 15.10(c)(4) be broader to prevent issuers from directly
or indirectly paying interest or yield to payment stablecoin holders
(rather than presuming that certain arrangements with affiliates or
related third parties violate the prohibition)? Are there examples of
potentially evasive behavior that the OCC should expressly include in a
prohibition? If the OCC were to expand the prohibition, are there
activities that should be expressly carved out of such an expansion?
Question 38: Should the prohibition on interest and yield in
proposed Sec. 15.10(c)(4) clarify the terms ``pay,'' ``interest,''
``yield,'' ``solely,'' or any other terms? If so, what clarifications
would be helpful? What types of rewards, if any, should be subject to
the prohibition?
Question 39: What would the economic impact of a narrow prohibition
on paying interest or yield solely in connection with the holding, use
or retention of a payment stablecoin be relative to a broader
prohibition (i.e., one that includes relationships with affiliates or
third parties)? What impact would either prohibition have on bank
deposits?
Question 40: Is the scope of the prohibition against pledging,
rehypothecating, or reusing reserve assets sufficiently clear? Are
there specific types of transactions, relationships, or structures for
which it would be helpful to clarify whether the prohibition applies?
For example, should the OCC clarify whether the prohibition would
prevent establishing a collateral trustee that would hold a security
interest in reserve assets for the benefit of stablecoin holders? What
arguments weigh for and against finding that the prohibition would
prohibit these arrangements? If a permitted payment stablecoin issuer
sets up a collateral trustee arrangement where the issuer grants a
security interest in the reserve assets, does this arrangement
sufficiently protect the reserve assets in the event of insolvency or
bankruptcy? Should a permitted payment stablecoin issuer be required to
make particular disclosures if it uses such an arrangement? What should
those disclosures include?
Question 41: Should the OCC specify what ``creating liquidity to
meet reasonable expectations of requests to redeem payment
stablecoins'' means under proposed Sec. 15.10(c)(5)(iii)? Should the
OCC pre-approve repurchase agreements by rule as proposed in Sec.
15.10(c)(5)(iii)(B)? Alternatively, should the OCC allow for broad and
open-ended approvals of the sale of reserves as purchased securities in
repurchase agreements or should approvals be limited to specific types
of transactions? What factors should the OCC consider prior to granting
approval of the sale of reserves as purchased securities in repurchase
agreements under proposed Sec. 15.10(c)(5)(iii)(B)?
Question 42: Should permitted payment stablecoin issuers be
required to provide disclosures stating that stablecoins are not legal
tender, issued by the United States, or guaranteed or approved by the
United States? If so, should the OCC impose any requirements on the
manner in which disclosures are made? For example, should the OCC
require that disclosures be made on the permitted payment stablecoin
issuer's website, at point of direct sale by the issuer, alongside
other types of disclosures, or in some other manner?
Question 43: Is any further clarity needed regarding the
prohibition on the use of deceptive names, marketing, and
representations in proposed Sec. 15.10(c)(1) through (3)? For example,
should the OCC specify what kind of images or branding are likely to
violate the prohibition? Should the OCC require permitted payment
stablecoin issuers to affirmatively state that payment stablecoins are
not legal tender, issued by the United State, or guaranteed or approved
by the Government of the United States? Should the OCC explicitly
require permitted payment stablecoin issuers to disclose that payment
stablecoins are not subject to depositor share insurance?
Reserve Assets
Question 44: Sec. 4(a)(1)(A)(vi) includes ``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 clauses (i) through (v)'' as eligible
reserve assets for payment stablecoins issued by permitted payment
stablecoin issuers. However, many or all Government money market funds
are investment companies registered under section 8(a) of the
Investment Company Act of 1940. Should the provision relating to
securities issued by investment companies registered under section 8(a)
of the Investment Company Act, or other registered Government money
market funds, be clarified? Does section 4(a)(1)(A)(vi) permit
securities issued by investment companies registered under section 8(a)
of the Investment Company Act of 1940 that are not Government money
market funds to be reserve assets for payment stablecoins issued by
permitted payment stablecoin issuers? Are there any registered
Government money market funds that are not investment companies
registered under section 8(a) of the Investment Company Act? Does
section 4(a)(1)(A)(vi) permit securities issued by registered
Government money market funds that are not registered under section
8(a) of the Investment Company Act to be reserve assets for payment
stablecoins issued by permitted payment stablecoin issuers?
Question 45: Should the provisions relating to repurchase
agreements and reverse repurchase agreements be clarified? For example,
should the OCC provide that deposits can serve as collateral for
repurchase agreements? If so, what limitations, if any, should the OCC
include with respect to the use of deposits as collateral?
Question 46: Should the proposed rule require a buffer or impose
haircuts on certain reserve assets to ensure that reserve asset values
do not fall below outstanding issuance values? The GENIUS Act requires
permitted payment stablecoin issuers to maintain identifiable reserves
``on an at least 1 to 1 basis.'' What measures should the proposed rule
include to ensure that issuers are able to maintain this minimum?
Without a buffer or other measures, the fair value of a permitted
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payment stablecoin issuer's reserve assets could fall below the
required minimum if there are, for example, sudden increases in
interest rates. While proposed Sec. 15.13(a)(3)(i) would include a
requirement to manage interest rate risk, should there be a more
express requirement for a buffer (for example, 1% of reserve assets)?
For example, the proposed rule could require permitted payment
stablecoin issuers to maintain an amount of reserve assets sufficient
to stay above the outstanding issuance value in light of risks facing
the permitted payment stablecoin issuer, including interest rate risk
and risks associated with the capability to access and monetize reserve
assets. Are there other considerations the OCC should take into account
if it chose to calibrate such a buffer? As an alternative to requiring
such a buffer, should the OCC provide guidance on what level of buffer
is generally appropriate as a matter of prudent risk management?
Question 47: Should the OCC expressly require that a certain
percentage of reserve assets be held in custody either at an affiliate
or at a third party? What are the potential costs and benefits of this
approach, including with respect to operational risk?
Question 48: Is the term ``deposits or insured shares payable on
demand'' sufficiently clear? If not, how should the OCC clarify the
term (i.e., what types of accounts should expressly be included within
the term)?
Question 49: Should the proposed rule define ``reserve in tokenized
form'', to enhance clarity regarding proposed Sec. 15.11(b)(8)? If so,
should the OCC define ``reserve in tokenized form'' to refer to a
digital asset, as defined in proposed Sec. 15.2, that represents
another asset and provides full legal rights to that underlying asset?
What modifications to this definition or the rule's related terminology
would enhance clarity?
Question 50: In the provision in proposed Sec. 15.11(b)(5)
regarding reverse repurchase agreements, is the proposed rule
sufficiently clear in its reference to ``overcollateralization in line
with standard market terms?'' If not, what clarifications would be
appropriate?
Question 51: Should the OCC provide additional detail on what
securities could be in scope for ``any other similarly liquid Federal
Government-issued asset'' under Sec. 15.11(b)(7)? For example, should
Treasury securities with remaining maturity of two years or less be
permitted under Sec. 15.11(b)(7)? What would be the implications for
liquidity or interest rate risk of allowing these types of securities
to be held as reserve assets? If the OCC were to permit two-year
Treasury securities to be used as reserve assets, should the OCC impose
any additional requirements, such as requiring the weighted average
maturity of Treasury securities held as reserves to be no more than 93
days (or some shorter timeframe) or requiring additional reserve asset
diversification requirements (e.g., minimum amount of reserve assets
held as deposits or minimum number of depository institutions holding
the permitted payment stablecoin issuer's reserve assets) for permitted
payment stablecoin issuers that hold Treasury securities with a
remaining maturity between 94 days and two years?
Question 52: Should the proposed rule clarify that Treasury
Floating Rate Notes (FRNs) and Treasury Inflation-Protected Securities
(TIPs) be included as permissible reserve assets, assuming they
otherwise meet the requirements of the proposed rule, including
maturity requirements? Is there any reason these securities should be
excluded? Should Treasury Separate Trading of Registered Interest and
Principal of Securities (STRIPS) be included? Are there other
instruments that should be considered as included within the GENIUS
Act's phrase ``Treasury bills, notes, or bonds''? If these securities
are included, should there be additional requirements--for example,
both weighted average life and weighted average maturity limits to
accommodate interest rate resets in FRNs?
Question 53: Should the proposed rule's requirements for reserve
assets incorporate requirements to reflect potential interactions with
the larger market for Treasury securities? For example, should the
proposed rule include requirements to prevent any disruptive or
negative effects that the management or liquidation of Treasury reserve
assets might have on markets?
Question 54: The proposed rule would, consistent with the GENIUS
Act, allow as reserve assets funds held as demand deposits at an
insured depository institution (including any foreign branches or
agents, including correspondent banks). Should the proposed rule add
definitions for these terms to make them clearer or impose restrictions
on the use of foreign branches or agents and correspondent banks? For
example, should the proposed rule require that stablecoins denominated
in United States dollars only be backed by demand deposits at U.S.-
based depository institutions (i.e., reserve assets could not include
Eurodollar deposits)? Should the OCC include any additional
requirements with respect to reserve assets held abroad, such as
applying a haircut to the reserve assets, imposing a capital charge, or
including additional policies and procedures to manage the risks
associated with holding reserve assets abroad?
Question 55: Should the OCC develop a formal process to consider
and approve securities under Sec. 15.11(b)(7)? Should the OCC allow
permitted stablecoin issuers or other parties to request that the OCC
consider a specific type of security? Should any determinations on
additional securities approved under this authority be made public?
Question 56: The proposed rule would require a permitted payment
stablecoin issuer to maintain reserve assets, the fair value of which
must equal or exceed the outstanding issuance value at all times.
Should the OCC impose a different standard, such as requiring the fair
value of reserve assets to equal or exceed the outstanding issuance
value at the end of each day or at the end of each business day?
Question 57: The proposed rule's requirements for reserve asset
diversification and concentration include two options: (1) a flexible,
principles-based baseline requirement plus a quantitative safe harbor
or (2) quantitative requirements applicable to all permitted payment
stablecoin issuers. Which option is more appropriate? How should either
option, including the quantitative limits included in each option, be
modified? For example, should the requirement or safe harbor's
provision regarding holding reserve assets as deposits or insured
shares payable on demand or money standing to the credit of an account
with a Federal Reserve Bank be set at five percent, 10 percent, 15
percent or 20 percent? Should this requirement be set at a different
percentage (e.g., 10 percent) for small issuers and a larger percentage
(e.g., 15 percent) for larger issuers? Should the requirement or safe
harbor's provision regarding maintaining reserve assets as demand
deposits, 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 be set at 20 percent, 25 percent, or 30 percent? Are the
proposed maxima for various types of reserve assets that may be held at
an eligible financial institution appropriately calibrated? Would a
shorter or longer weighted average maturity be appropriate? Should
larger issuers have a shorter weighted average
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maturity requirement than smaller issuers? If the final rule includes
quantitative requirements for all permitted payment stablecoin issuers,
should there be additional risk management requirements to ensure that
permitted payment stablecoin issuers appropriately manage
diversification and concentration risk? In particular, the risk
management requirements could include a requirement that permitted
payment stablecoin issuers must measure and manage the risk that their
gross exposure to any one institution or a small number of institutions
may impair their ability to satisfy redemption demands.
Question 58: The reserve asset diversification and concentration
limits in proposed Sec. 15.11(c) would not distinguish reserve assets
held at Federal Reserve Banks and would therefore include requirements
(or conditions of a safe harbor) that would limit the reserve assets
held at any one Federal Reserve Bank. In light of the low credit risk
associated with Federal Reserve Banks, should the final rule eliminate
these requirements or conditions? Specifically, should the OCC exempt
reserve assets held at a Federal Reserve Bank from the conditions in
Sec. 15.11(c)(2)(iii) and Sec. 15.11(c)(2)(iv) of Option A and the
requirements in Sec. 15.11(c)(3) and Sec. 15.11(c)(4) of option B?
Question 59: The reserve asset diversification and concentration
limits in proposed Sec. 15.11(c) would limit the reserve assets,
including deposits, at any one financial institution. Should there be
an exception to some or all of these requirements for a subsidiary of
an OCC-regulated depository institution approved to be a permitted
payment stablecoin issuer if the OCC-regulated depository institution
has less than a certain amount of total assets (e.g., $10 billion, $30
billion, $50 billion)? For example, should a permitted payment
stablecoin issuer that is a subsidiary of an OCC-regulated depository
institution with less than a certain amount of total assets be
permitted to hold a larger percentage, or all, of its reserve assets as
deposits at the OCC-regulated depository institution? Should any such
exception be subject to any conditions? For example, should it only be
available if the OCC-regulated depository institution is well-
capitalized?
Question 60: Option A for proposed Sec. 15.11(c) would require
that a permitted payment stablecoin issuer must maintain reserve assets
that are sufficiently diverse to manage potential credit, liquidity,
interest rate, or price risks. Are there other risks that should be
added to this list, or removed from it? If the final rule adopts
mandatory quantitative diversification and concentration requirements,
should the requirement to monitor and manage these risks be codified as
a separate risk management requirement?
Question 61: The OCC invites comment on the extent to which
additional diversification requirements are necessary. Is it necessary
to require that permitted payment stablecoin issuers maintain more than
one type of reserve asset? Would it be sufficient for the OCC to
require that permitted payment stablecoin issuers maintain only one
secondary, backup reserve asset?
Question 62: To diversify the maturity profile of reserve assets,
should permitted payment stablecoin issuers be required to maintain a
minimum amount of their reserve assets in cash or equivalents or assets
that can be converted more readily into short-term liquidity, for
example within a daily or weekly timeframe, akin to the requirements
for money market funds in SEC Rule 2a-7 or short-term investment funds
in 12 CFR 9.18(b)(4)(iii)?
Question 63: Should the proposed rule include other measures to
encourage reserve assets to be held in the form of insured deposits or
insured shares? Proposed Sec. 15.11(d) would include a requirement for
larger permitted payment stablecoin issuers to maintain a minimum
percentage of assets as insured deposits or insured shares. While it
may be difficult for larger permitted payment stablecoin issuers to
hold reserve assets as insured deposits due to deposit insurance limits
and the finite number of insured depository institutions in the United
States, should permitted payment stablecoin issuers be required to hold
some minimum amount of reserves as insured deposits in order to provide
extra protection for stablecoin holders? Should the thresholds in
proposed Sec. 15.11(d) be set at different levels: for example, apply
to issuers with an outstanding issuance value of $1 billion, $10
billion, $50 billion, or $100 billion or more? Should covered larger
issuers be required to maintain a smaller or larger percentage of
reserve assets as insured deposits or insured shares (for example, 0.1
percent, 0.25 percent, 1 percent, or 2 percent)? Should the cap be
higher or lower (for example, $100 million, $250 million, or $1
billion)?
Question 64: How should the OCC calibrate the insured deposit
requirement for permitted payment stablecoin issuers? Should it be as a
percentage of assets or an absolute number? If a percentage, what
percentage should that be? If an absolute number, what should that be?
Should there be a cutoff for permitted payment stablecoin issuers above
or below a certain size threshold that should be required to place
insured deposits? If so, why? What would be the implications of such a
cutoff? What is the total amount of insured stablecoin deposits that
the banking system in the United States can or should reasonably
absorb? What is the total amount of insured stablecoin deposits that an
individual community bank is likely to hold?
Question 65: There are approximately 4380 total insured banks in
the United States. Should the proposed rule include other measures to
spread insured stablecoin deposits throughout the banking system? If
so, how broadly should insured deposits from permitted payment
stablecoin issuers be distributed? For example, should the final rule
be calibrated so that essentially every bank in the United States could
hold some amount of insured deposits from permitted payment stablecoin
issuers if consistent with their risk appetite and risk management
abilities? If so, why? If not, why not?
Question 66: Deposit placement services could be used to facilitate
compliance with these diversification requirements, as long as
permitted payment stablecoin issuers are able to maintain the
operational ability to access the deposits, consistent with proposed
Sec. 15.11(a). Please describe any risks associated with using such
services or other intermediaries and how permitted payment stablecoin
issuers could best mitigate these risks.
Question 67: Could reserve diversification requirements that
encourage diffusion of deposits cause risks to the banking system (for
example, increasing run risks at banks or replacing more stable
deposits with deposits that more likely to be withdrawn quickly and in
large volumes)? Could such diversification requirements raise
operational risks for permitted payment stablecoin issuers or banks?
How difficult would it be for permitted payment stablecoin issuers to
liquidate such deposits in a stressed environment? If deposit insurance
rules change, so that even larger permitted payment stablecoin issuers
could be able to hold all their required deposits as insured, should
all deposits held as reserve assets be required to be insured?
Question 68: Should the proposed safe harbor (or alternatively, the
liquidity requirements directly) require a permitted payment stablecoin
issuer to maintain at least 20 percent of required reserve assets at
insured depository
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institutions with less than $30 billion in total assets (either
directly or indirectly through a deposit broker)? Would such an
approach help ensure appropriate reserve asset diversification,
particularly as these smaller insured depository institutions are
unlikely to be counterparties to the permitted payment stablecoin
issuer in repurchase agreements or reverse repurchase agreements?
Question 69: How would the proposed rule affect the amount of
deposits maintained in the United States banking system? Would the
proposed rule reduce the number of deposits maintained in the United
States banking system and therefore affect the ability of United States
banks to lend? What, if any, measures should the proposed rule include
to mitigate such concerns? Should the proposed rule include a minimum
percent of reserve assets as deposits in order to offset potential
reductions in overall deposit levels?
Question 70: One option in the proposed rule would include flexible
baseline diversification and concentration requirements, coupled with
an optional quantitative safe harbor. Should the default requirement
for permitted payment stablecoin issuers include quantitative limits
for asset diversification? For example, the OCC could impose
quantitative limits on the maximum amount of uninsured demand deposits
that permitted payment stablecoin issuers can maintain with a single
insured depository institution, in addition to any restrictions imposed
by the FDIC pursuant to its authority under the Act. Permitted payment
stablecoin issuers might be required to maintain no more than a
specified percentage (for example, one percent, five percent, or 10
percent) as uninsured demand deposits at a single depository
institution. Examples of other quantitative limits could include the
following.
--Minimum cash limits, such as a minimum amount of money standing to
the credit of an account of a Federal Reserve bank plus demand deposits
as a percentage of operating expenses for a specific period, as a
percentage of total reserve assets, or as a percentage of modeled
stress cash outflows (for example, 10 percent or 15 percent);
--Minimum amount of assets maturing daily, weekly, or over some other
time period (for example, assets available on demand or maturing weekly
must constitute 20 percent of reserve assets);
--Counterparty diversification limits, such as maximum credit exposure
to repo or reverse repo counterparties; and
--Limitations on tokenized forms of reserve assets under proposed Sec.
15.11(b)(8), such as limiting the amount to no more than a certain
percentage (e.g., 20 percent) of a permitted payment stablecoin
issuer's total reserve assets.
What other limits should be considered? Such requirements could be
tailored according to size; for example, larger and more complex
permitted payment stablecoin issuers may be required to adhere to more
stringent diversification and concentration requirements.
Question 71: Should the OCC adopt the proposed safe harbor option
(Option A) for proposed Sec. 15.11(c)? Does the proposed safe harbor
adequately address differences in business models, while addressing
risks associated with asset concentration? Should the proposed safe
harbor include different quantitative thresholds? What other features
should the safe harbor incorporate, if adopted?
Question 72: Should the OCC adopt any other restrictions on reserve
asset concentration? If so, should they be based on gross exposures to
particular counterparties? Or should the restrictions be more
prescriptive? For example, should the rule prohibit a permitted payment
stablecoin issuer from entering into a reverse repurchase agreement
with any counterparty that holds deposits that serve as reserve assets
for the permitted payment stablecoin issuer? Are the reserve asset
concentration requirements appropriately calibrated? Should the OCC
require that no more than 5, 10, or 15 percent of a permitted payment
stablecoin issuer's reserve assets may be deposits or insured shares
held at a single depository institution?
Question 73: Should the OCC's concentration requirements include
requirements to not have more than a specified portion of reserve
assets at a single custodian? Would this requirement impose undue
burden? For example, would requiring the use of more than one eligible
financial institution as custodian of Treasury securities and
collateral for reverse repurchase agreements impose undue burden or
complexity on the management of reserve assets? What are the costs and
benefits of such an approach, including from an operational risk
perspective?
Question 74: Should the proposed rule include measures to ensure
that a permitted payment stablecoin issuer is not overly reliant on
short-term lending transactions to meet immediate liquidity needs? In
the absence of such a restriction, a permitted payment stablecoin
issuer hypothetically might maintain a reserve asset portfolio entirely
of Treasury securities and rely on overnight repo transactions to
generate the daily liquidity amounts required by the proposed rule.
This arrangement could leave the permitted payment stablecoin issuer
vulnerable to disruptions in repo markets. Should the proposed rule
require excluding short-term repayment obligations from daily and
weekly liquidity? For example, the proposed rule could require, for
daily liquidity, deducting payments due on overnight borrowings and,
for weekly liquidity, deducting any payments due within the next five
business days? If such a restriction is included, should repayment
deductions be offset by any expected inflows?
Question 75: Consistent with the Act, the proposed rule would allow
physical currency, including coins, to serve as reserve assets.
Nevertheless, given the limitations on transferring physical currency,
particularly difficulties that may arise in deploying physical currency
quickly to meet sudden demands for redemptions, should the proposed
rule impose limits on how much physical currency can serve as reserve
assets? For example, the proposed rule could require that physical
currency constitute no more than 5 percent or 10 percent of a permitted
payment stablecoin issuer's reserve assets. Should the proposed rule
impose special requirements to make sure that physical currency is
safeguarded (for example, against theft or fire)? For example, should
there be periodic verification or inspection requirements for physical
currency used as reserve assets?
Question 76: The proposed rule would generally require reserve
assets to be valued at fair value for the purpose of determining
compliance with the proposed rule's reserve asset requirements. Should
United States coins and currency be required to be valued at par for
purposes of the proposed rule's reserve asset requirements?
Question 77: Should the proposed rule include special limits on
Treasury bonds and notes that may be more thinly traded and therefore
more likely to sell at a discount? The GENIUS Act would allow permitted
payment stablecoin issuers to hold as reserve assets Treasury notes and
bonds so long as they have a maturity of 93 days or less. Older and
off-the-run Treasury securities may be more difficult to sell and may
only be marketable at a
[[Page 10257]]
discount.\128\ Should the proposed rule limit the portion of reserve
assets that Treasury bonds and notes can comprise--for example, 20
percent of total reserve assets?
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\128\ See Dimitri Vayanos & Jiang Wang, ``Market Liquidity--
Theory and Empirical Evidence,'' National Bureau of Economic
Research Working Paper 18251 (July 2012), https://www.nber.org/system/files/working_papers/w18251/w18251.pdf.
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Question 78: Should the final rule specify the manner in which
banks must ``measure and manage'' credit, liquidity, interest rate,
price risk, and concentration risk under proposed Sec. 15.11(c)? For
example, should the OCC adopt related record retention or other
requirements?
Question 79: Should permitted payment stablecoin issuers that are
subsidiaries of national banks or Federal savings associations be
required to make arrangements to borrow via the discount window or from
other contingent funding sources, such as Federal Home Loan Banks? The
ability to borrow from contingent funding sources, including the
discount window, may depend on, among other things, the policies and
regulations of the Federal Reserve System, and the OCC welcomes
comments on how permitted payment stablecoin issuers may, or may not,
be able to utilize liquidity provided by contingent funding sources.
Question 80: Should the proposed rule include special measures to
ensure that reverse repurchase agreements are appropriately
overcollateralized? Proposed Sec. 15.11(b)(5) would permit the
inclusion, as reserve assets, of reverse repurchase agreements
``subject to overcollateralization in line with standard market
terms.'' As one possibility, the proposed rule could include no special
measures, and the examination and supervision process could be used to
evaluate if particular payment stablecoin issuers are failing to
overcollateralize their reverse repurchase agreements in line with
standard market terms. As another possibility, the proposed rule could
include more express requirements, for example, that
overcollateralization haircuts cannot be less than 0.5 percent.
Question 81: Should permitted payment stablecoin issuers be
required to conduct stress tests, including stress tests to manage
liquidity and interest rate risks? The GENIUS Act permits the inclusion
of bilateral reverse repurchase agreements as reserve assets ``with
[counterparties] that the issuer has determined to be adequately
creditworthy even in the event of severe market stress.'' How should
issuers evaluate the impact of ``severe market stress''? Should
diversification requirements be based on the outcome of any stress
tests? For example, permitted payment stablecoin issuers could be
required to maintain a minimum amount of readily available reserve
assets (for example, demand deposits and reserve balances) based on the
results of liquidity stress tests? In particular, permitted payment
stablecoin issuers could be required to maintain--or could elect to
maintain as part of the proposed safe harbor--an amount of readily
available reserve assets at least sufficient to meet outflow levels
predicted by an internal liquidity stress test.
Question 82: Should permitted payment stablecoin issuers be
required to adopt written plans or policies and procedures related to
liquidity planning? For example, should permitted payment stablecoin
issuers be required to adopt their own concentration restrictions,
including limits on deposit concentrations at insured depository
institutions, that are tailored to their own business model,
operations, and risk profile? Similarly, should permitted payment
stablecoin issuers be required to adopt liquidity management plans,
which would include provisions to assign responsibility for liquidity
risk management and address contingency funding needs?
Question 83: Subclause 4(a)(1)(A)(i) of the GENIUS Act (12 U.S.C.
5903(a)(1)(A)(i)) provides that reserve assets can include ``money
standing to the credit of an account with a Federal Reserve Bank.''
Should diversification requirements include special measures for
reserve bank balances if permitted payment stablecoin issuers are able
to maintain them?
Question 84: For permitted payment stablecoin issuers that are
subsidiaries of national banks or Federal savings associations, should
the proposed rule contain special requirements to ensure that reserve
assets are appropriately maintained and controlled within the larger
corporate structure? Or should the proposed rule require that a
permitted payment stablecoin issuer have dedicated liquidity management
personnel who have independent control over the liquidity management
functions of the permitted payment stablecoin issuer (and its reserve
assets)?
Question 85: Should the liquidity management standards in proposed
part 15 change depending on the standards for timely redemption? For
example, should the rule require less stringent liquidity standards
(for example, less readily available funds required) if permitted
payment stablecoin issuers have a longer time to redeem tendered
stablecoin?
Question 86: Should the proposed rule include additional measures
to address de-pegging in the secondary market? For example, should the
proposed rule bar a permitted payment stablecoin issuer from issuing
new payment stablecoins if a permitted payment stablecoin issuer's
payment stablecoins trade in secondary markets at some price that is a
set amount less than par (e.g., trading at or below $0.99, $0.80 or
some other amount) for some sustained period of time (e.g., 24 hours)?
Question 87: Should other liquidity rules be amended to accommodate
the changes made by the proposed rule and the GENIUS Act? For example,
should the liquidity coverage ratio (LCR) and net stable funding ratio
(NSFR) rules be amended so that depository institutions are unable to
include high quality liquid assets (HQLA) held by permitted payment
stablecoin issuer subsidiaries as eligible HQLA in their own LCR and
NSFR calculations? Similarly, should any outflows associated with a
permitted payment stablecoin issuer subsidiary be excluded from a
parent entity's LCR calculations? Should the stablecoin activities of
permitted payment stablecoin subsidiaries be fully excluded from the
LCR calculations of parent entities? Or should there be a limited
outflow commensurate with the possibility that a parent entity may
provide support to a permitted payment stablecoin issuer subsidiary
(for example, 1 percent, 5 percent, or 10 percent or outstanding
issuance value)? Should the LCR rule be amended so that depository
institutions holding uninsured deposits, particularly large balances,
that represent reserve assets from permitted payment stablecoin issuers
must assign a higher outflow to such deposits? Should the LCR rule be
amended in light of any other implications of the Act, such as how it
may apply to custodians under section 10 of the Act?
Question 88: For purposes of incorporating ``average tenor and
geographic location of custody of each category of reserve
instruments'' in the composition report required under Sec. 15.11(e),
what, if any, specific content and structure should the OCC require?
For example, should the report include information about deposit
concentration and CUSIPs of securities? Should the required content
include the composition of the reserve assets by type of assets and
maturities and by counterparty issuer? For purposes of stating the
geographic location of custody, should it suffice to state the country
of custody? Or should more
[[Page 10258]]
granular information be required? Should the OCC require that the
composition report conform to the specified template? Are there
specific methods for calculating tenor that the rule should require or
explicitly permit? For example, should the rule define average tenor as
the weighted average maturity or life of the asset? Should the monthly
composition report (for both permitted payment stablecoin issuers and
foreign payment stablecoin issuers) require the issuer to distinguish
between insured and uninsured deposits?
Question 89: Are there any additional steps that the OCC should
take to encourage transparency while minimizing burden with respect to
the reserve asset composition report?
Question 90: What modifications to the reporting requirements,
including the reserve asset composition report, would be appropriate
for arrangements where one issuer issues multiple stablecoins under
different brands (e.g., white label arrangements), if that arrangement
is permitted in the final rule? Are there any additional disclosures
that the issuer should provide in order to ensure that the report is
not misleading?
Question 91: Should the report be required to list and name any
depository institutions holding reserve assets? Should the report be
required to list and name other eligible financial institutions holding
reserve assets? Should the proposed rule include additional measures to
ensure that reserve assets are appropriately traceable and linked to
their corresponding stablecoin so as to avoid any difficulties in
resolving claims to reserve assets?
Question 92: For purposes of the composition report and reserves in
tokenized form, should the permitted payment stablecoin issuer be
required to disclose the location of custody of both the reserve
instrument in tokenized form on a ledger and any real-world asset that
the reserve in tokenized form represents? What related reporting
requirements would be appropriate?
Question 93: Should the values and information in the monthly
report be required to be as of a particular date or time?
Alternatively, should permitted payment stablecoin issuers publish on
their websites a report showing the real-time values of the items
required in the monthly composition report? Having the most recent
information will make the more report more useful, and the OCC invites
comment on how much real-time reporting is feasible and whether it may
only be feasible for certain items. Should the monthly report be
required to include both month-end figures (for the previous month) and
some information that can be presented in real-time (for example, the
value of reserves or outstanding issuance value)? Are there potential
challenges in providing assurance over real-time information presented
in a monthly report?
Question 94: Should the OCC require permitted payment stablecoin
issuers to publish the monthly certification on their websites, in
addition to publishing the monthly reserve asset composition report?
Should the OCC specify the content and form of the certification?
Question 95: Should the monthly composition report be published at
some point before the examination by a registered public accounting
firm? For example, a permitted payment stablecoin issuer could publish
the report five days after the end of the previous month and have the
report examined 30 days after the end of the previous month and
disclose any discrepancies uncovered by the examination. Would the
benefits of more timely availability of these reports outweigh the
potential costs associated with the risk of subsequent changes as a
result of the examination that would be completed at a later date?
Question 96: Is the requirement in proposed Sec. 15.11(f) to have
information disclosed in the previous month-end report examined by a
registered public accounting firm sufficiently clear? If not, what
additional clarity should the OCC provide with respect to the
examination by a registered public accounting firm? Should the
examination be performed at the ``reasonable assurance'' level or at
some other standard? What additional standards, if any, should the OCC
apply to ensure that the examination is accurate and appropriate?
Should the engagement letter between the permitted payment stablecoin
issuer and the registered public accounting firm require the registered
public accounting firm to attest to whether the permitted payment
stablecoin issuer is in compliance with the reserve asset requirements
in Sec. 15.11 (or a subset thereof), based on the information
available to the registered public accounting firm? What criteria
should be used for the examination? Would assurances from the
management of the permitted payment stablecoin issuer regarding the
information in the issuer's weekly or monthly report be sufficient? If
not, what other criteria should be included?
Question 97: Should permitted payment stablecoin issuers be
required to monitor the financial condition of depository institutions
holding reserve assets? Should the financial condition of a depository
institution holding an issuer's reserve assets be considered in whether
issuers have met their deposit concentration obligations?
Question 98: Are there additional considerations that the OCC
should take into account with respect to proposed Sec. 15.11(g)(1),
including whether it is appropriate that the permitted payment
stablecoin issuer must not issue new stablecoins until it remediates a
shortfall in reserve assets? For example, should there be some period
of time (e.g., one or two days) where an issuer should be able to issue
stablecoins despite a shortfall? Is the requirement in Sec.
15.11(g)(3) set appropriately at 15 days or should the period be longer
or shorter (e.g., 5 days, 10 days, 20 days, 25 days, 30 days)?
Question 99: Should the proposed rule include restrictions on
expenses that may be charged against reserve assets? Is it worth making
clear that permitted payment stablecoin issuers may not charge general
corporate expenses against reserve assets? While there may be a narrow
set of expenses that can be paid from reserve assets (for example,
interest on a repurchase agreement or fees paid to an investment
company holding reserve assets), the OCC expects that paying most other
expenses from reserve assets would be inconsistent with the requirement
for permitted payment stablecoin issuers to maintain identifiable
reserve assets backing outstanding issuance value on a 1 to 1 basis.
Redemption
Question 100: Has the OCC appropriately defined ``timely'' for
purposes of redemption in proposed Sec. 15.12(b)(1)(i) as not
exceeding two business days? If not, what may be a more appropriate
timeframe? For example, should the OCC consider other timeframes
ranging from one calendar day to seven calendar days timely? Should the
OCC consider some timeframe longer than seven calendar days timely?
Should the OCC define ``timely'' in a manner that scales with the
liquidity of the underlying reserve assets or other factors? How should
any definition of ``timely'' appropriately balance considerations of
price stability and run risk?
Question 101: Should the OCC include a safe harbor for failing to
timely redeem a payment stablecoin in certain circumstances that may be
outside of the permitted payment stablecoin issuer's control (e.g.,
disruptions to payment or banking systems for which the permitted
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payment stablecoin issuer is not responsible)?
Question 102: Should the OCC consider a longer redemption period
``timely'' in times of stress? If so, how long should the OCC extend
the redemption period and what metrics and data should the OCC look to
in order to determine whether an extension is warranted? For example,
in the proposed rule, if a permitted payment stablecoin issuer faced
redemption demands in excess of 10 percent of its outstanding issuance
value over one day, the time period for timely redemption is generally
extended to seven calendar days. Would other metrics be more
appropriate? Should the OCC automatically extend the time period for
timely redemption in the event of a spike in redemption requests?
Should the issuer be required to notify the OCC if it exceeds the
threshold for extending the redemption period, as proposed? Should the
issuer be required to inform the public upon automatic extension of the
time period? Should the extension of the time period to seven calendar
days be such that notwithstanding a permitted payment stablecoin issuer
being able to demonstrate that it can redeem requests in an orderly
fashion and through a fair and transparent process, the permitted
payment stablecoin issuer would not be able to redeem sooner than seven
calendar days? Should the permitted payment stablecoin issuer be able
to make the determination that it can redeem through a fair and
transparent process on its own without OCC approval or should the
standard otherwise be changed? Should the extended redemption time
period apply to outstanding and subsequent redemption requests as
proposed?
Question 103: Should the OCC define ``redemption'' for purposes of
the proposed rule? If so, should it be defined broadly to mean that,
for example, the permitted payment stablecoin issuer has initiated
payment to the payment stablecoin holder in return for a tendered
payment stablecoin? Are there reasons to define ``redemption'' more
narrowly? For example, should the OCC define redemption to mean that
the permitted payment stablecoin issuer's payment to a stablecoin
holder in exchange for stablecoin has settled?
Question 104: Are there limitations that the OCC should impose on
redemption fees, e.g., to discourage run risk or to encourage price
stability?
Question 105: Should the OCC require permitted payment stablecoin
issuers to deliver notice to current customers whenever they change
fees, as proposed? Are there any specific methods or modes of
communication that the OCC should require? If so, which modes of
communication would be most effective and appropriate?
Question 106: Should the OCC include specific additional provisions
regarding fee disclosures in the regulation text? If so, what
additional requirements should be included? Should the OCC specify how
section 5 of the FTC Act (15 U.S.C. 45) relating to unfair or deceptive
acts or practices could apply to how the OCC evaluates the disclosures?
To whom should issuers have a responsibility to deliver disclosures
regarding changes in fees? Should it be all payment stablecoin holders
(e.g., include retail holders who purchased from an exchange or
secondary market), or should it be a narrower subset of holders (e.g.,
only holders who purchased directly from the payment stablecoin
issuer)? Are there obstacles that would make it impractical to deliver
change in fee notices to all payment stablecoin holders?
Question 107: The OCC has proposed several categories of disclosure
in the proposed rule and requested comment as to whether it should
propose additional categories. Taken collectively, would these
disclosures provide potential customers of permitted payment stablecoin
issuers with the appropriate information to inform their use of
stablecoins? Are there any steps the OCC should take to ensure that
potential customers are not confused or overwhelmed by these
disclosures, especially in light of the relative unfamiliarity many
potential customers may have with stablecoins? For example, should the
OCC take any steps to unify required disclosures so that they are all
provided to customers at a specific point during the relationship? If
so, how should the OCC ensure that the most pertinent information is
sufficiently emphasized? Is there anything else the OCC should do to
ensure that potential customers are appropriately informed in regard to
stablecoins issued by permitted payment stablecoin issuers? Are there
any technical aspects of distributed ledgers or blockchain the OCC
should take advantage of in relation to disclosures? For example,
should certain disclosures be automated through smart contracts, such
as with wrappers or other techniques?
Question 108: Currently, many stablecoin issuers have issuance
policies that may limit direct interaction with retail stablecoin
holders. What are the potential impacts of these policies on retail
stablecoin holders during a liquidity event? Should the OCC explicitly
require permitted payment stablecoin issuers to redeem stablecoins
presented by any stablecoin holder that has undergone appropriate on-
boarding including customer screening, as proposed? Should the OCC
require permitted payment stablecoin issuers to redeem payment
stablecoins presented by a stablecoin holder that has an account
relationship at a regulated financial institution? Is additional
clarity needed as to for whom a permitted payment stablecoin issuer is
obligated to redeem a permitted payment stablecoin? Should the OCC
impose any additional rules addressing minimum amounts for redemption?
For example, should the OCC prohibit redemption minimums or set the
minimum at some point other than one payment stablecoin?
Risk Management
Question 109: How should the OCC ensure that the standards in
proposed Sec. 15.13 are ``principles-based'' while providing
sufficient clarity to permitted payment stablecoin issuers? Should the
requirements in proposed Sec. 15.13 be more high level or more
detailed?
Question 110: Should certain of the risk management requirements
only apply to large permitted payment stablecoin issuers? If so, which
requirements should only apply to large permitted payment stablecoin
issuers, and what would be the appropriate threshold for determining
that a permitted payment stablecoin issuer is a large issuer (e.g., $10
billion in outstanding issuance value)?
Question 111: Which standards from 12 U.S.C. 1831p-1 and 12 CFR
part 30 appendices A and B should or should not apply to permitted
payment stablecoin issuers? Are there other standards not in 12 U.S.C.
1831p-1 and 12 CFR part 30 appendices A and B that should apply to
permitted payment stablecoin issuers?
Question 112: Do the proposed risk management requirements
appropriately provide for clear management roles, responsibilities, and
accountability? If not, how should the proposed risk management
requirements be revised?
Question 113: Should permitted payment stablecoin issuers be
required to adopt and adhere to a risk appetite statement?
Question 114: Should permitted payment stablecoin issuers be
required to regularly (e.g., on at least an annual basis), review their
risk management framework and make any changes to appropriately align
risk management activities with their business objectives and
strategies?
[[Page 10260]]
Question 115: Should the proposed rule's requirements with respect
to interest rate risk management be modified? If so, how? For example,
should permitted payment stablecoin issuers have in place the
appropriate policies, procedures and internal controls for their
interest rate risk management programs? Should permitted payment
stablecoin issuers develop appropriate measurement of interest rate
risk as part of their interest rate risk management programs? Should
permitted payment stablecoin issuers establish risk appetite and limit
structure as part of interest rate risk management programs? Should
permitted payment stablecoin issuers incorporate stress testing as part
of their interest risk management programs? Should permitted payment
stablecoin issuers be allowed to use assets that do not qualify as
reserve assets as part of an interest rate risk hedging program? If so,
should there be restrictions on the types of instruments used for
hedging purpose? Additionally, should the maturities of the hedging
instruments be matched with the maturities of the qualified reserve
assets?
Question 116: What types of credit risk may permitted payment
stablecoin issuers face, and how should permitted payment stablecoin
issuers manage these risks? Should the proposed rule include specific
requirements or standards related to management of credit risk? If so,
what specific requirements or standards should the OCC consider
including?
Question 117: Are the risk management requirements in proposed
Sec. 15.13(a)(8) necessary in light of the requirements in proposed
Sec. 15.11?
Question 118: Are there areas that fall under the categories of
technological, operational, compliance, or other risk management
principles-based requirements and standards that should be included in
Sec. 15.13 but were omitted from the proposed rule? Should proposed
Sec. 15.13(b) expressly address risks relating to smart contracts,
encryption, tokenized assets, or any other technology or procedure? Are
there standards which were included but are not applicable to permitted
payment stablecoin issuers? The proposed rule would require the
appointment of a qualified Information Technology and Security Officer.
Should the rule also require the appointment of a qualified Chief Risk
Officer and Chief Audit Executive? The OCC is considering all possible
combinations of the standards in proposed Sec. 15.13 and invites
comments on which combination of standards is appropriate as well as
whether to remove any of the individual standards in proposed Sec.
15.13.
Question 119: Should the OCC consider operational risk management
principles-based requirements and standards to address the situation
where an issuer needs to transfer payment stablecoins across different
blockchains to satisfy a redemption demand? If so, what kind of
requirements and standards should the OCC consider to address this
situation? For example, should there be specific requirements relating
to locking, minting, or burning payment stablecoins to facilitate a
transfer?
Question 120: Should the OCC include consumer protection-related
compliance risk management principles-based requirements and standards
in Sec. 15.13? If so, are there specific standards the OCC should
institute?
Question 121: Are there additional requirements concerning data
privacy that it would be appropriate for the OCC to include in proposed
part 15? Please describe in detail any such standards.
Question 122: Are there particular measures necessary to manage
compensation-related concerns at permitted payment stablecoin issuers,
notably risks associated with compensating any party with stablecoins
issued by a permitted payment stablecoin issuer?
Question 123: Should the OCC include additional requirements
concerning permitted payment stablecoin issuers' management of their
ability to satisfy redemption requests and to monetize reserve assets,
including by analyzing reasonably anticipated redemption scenarios?
Question 124: Should the OCC include additional requirements
relating to the maintenance of safeguards to prevent the payment of
compensation, fees, and benefits that are excessive or that could lead
to material financial loss to the permitted payment stablecoin issuer?
Question 125: Are the proposed requirements with respect to insider
and affiliate transactions appropriately tailored? If not, how should
they be modified? Should the OCC consider more prescriptive
quantitative or qualitative requirements related to insider and
affiliate transactions?
Question 126: Should the OCC include any requirements relating to
the concentration of management at unaffiliated permitted payment
stablecoin issuers? For example, should the OCC include limits on the
number of unaffiliated permitted payment stablecoin issuers for which
an individual may serve as an executive officer or senior management
official? Should any such limits be tied to the outstanding issuance
value of the permitted payment stablecoin issuer?
Question 127: Should the OCC require permitted payment stablecoin
issuers to acquire insurance against certain risks? For example, should
permitted payment stablecoin issuers be required to hold cyber
insurance policies? If so, what should be the minimum coverage
requirements? Should the OCC require some minimum level of property and
casualty insurance? If so, what should the minimum level of coverage
be? What disclosures, if any, would it be appropriate for a permitted
payment stablecoin issuer to make with respect to its insurance
coverage and to whom should those disclosures be directed (e.g.,
investors or payment stablecoin holders)? What implications with
respect to other applicable disclosure regimes should the OCC consider
when deciding whether to impose any disclosure requirements with
respect to insurance coverage? To what extent are the terms and
conditions for property and casualty (or other types of) insurance
coverage for permitted payment stablecoin issuers becoming more
standardized? What steps, if any, should the OCC take to encourage
standardization to increase certainty and consistency with respect to
insurance coverage across jurisdictions?
Question 128: Should the OCC provide that, with respect to a
permitted payment stablecoin issuer that is a subsidiary of an insured
depository institution, the permitted payment stablecoin issuer is
deemed to comply with the risk management requirements of proposed part
15 if it complies with the risk management requirements applicable to
its parent insured depository institution?
Audits, Reports, and Supervision
Question 129: Should the OCC alter the proposed reporting or
examination requirements? If so, how? Is there additional information
that should be included in the required reports or information that is
not included in the proposed rule? Is there information included in the
required reports or information that should not be included in the
proposed rule?
Question 130: Proposed Sec. 15.14(d) sets forth criteria under
which a permitted payment stablecoin issuer could qualify for an
extended examination cycle. Are those criteria properly calibrated? Is
the timeframe for an extended examination cycle appropriate? Should the
OCC consider decreasing or increasing the range for an extended
examination cycle? Should the
[[Page 10261]]
OCC consider both monthly trading volume and outstanding issuance value
when determining whether to employ an extended examination cycle? Are
there other factors that should be included, such as redemption rates,
asset composition, or creditworthiness? If so, how should the OCC
consider those factors?
Question 131: In proposed Sec. 15.14(h), the OCC proposes to
collect confidential weekly data from permitted payment stablecoin
issuers to minimize the examination burden on permitted payment
stablecoin issuers. The weekly data would include information relating
to: (1) outstanding issuance value, (2) reserve assets, (3)
redemptions, (4) minting and issuance, (5) exchanges on which the
stablecoin trades, (6) the 100 persons that hold or trade the
stablecoin the most, (7) data concerning securities held as reserve
assets (including information regarding reserve assets' CUSIPs, yield,
weighted average maturity and weighted average life), and (8)
information regarding repurchase agreements and reverse repurchase
agreements (including information regarding the counterparty, clearing
agency, collateral, and interest). Has the OCC identified in the
proposed form the appropriate data fields and categories of information
to collect from a permitted payment stablecoin issuer on a weekly basis
to understand the operations and risks unique to its business model? If
not, are there data fields that the OCC should not request on a weekly
basis and are there any additional data fields beyond those proposed
that the OCC should collect on a weekly basis from a permitted payment
stablecoin issuer to better assist in understanding the operations and
risks unique to its business model? Should the OCC collect secondary
market transaction data (e.g., trading price and volume)? Or should the
OCC only collect primary market transaction data? Would it be too
burdensome for permitted payment stablecoin issuers to provide the
proposed weekly data to the OCC electronically on a daily or real-time
basis? Should the OCC collect additional data regarding the custody of
reserve assets (or other covered assets)? Should the data collected be
made public? If, so, on what timeframe should the data be made public?
To what extent, if any, would a permitted payment stablecoin issuer be
anticipated to track the information required under the form referred
to in proposed Sec. 15.14(h) on a regular or real-time basis for its
own use in the absence of a requirement to report it? To what extent
would the proposed weekly and quarterly reporting requirements tend to
reduce the frequency at which the OCC would need to examine permitted
payment stablecoin issuers? Are there other reporting requirements that
the OCC could request that might reduce the frequency at which the OCC
would need to examine permitted payment stablecoin issuers?
Question 132: In proposed Sec. 15.14(i), the OCC requires all
permitted payment stablecoin issuers to submit a quarterly report of
financial condition. Should the OCC tailor this requirement for
permitted payment stablecoin issuers under a certain threshold? If so,
what should the threshold be? For permitted payment stablecoin issuers
under the threshold, should the OCC require less frequent reporting
(e.g., every six months) and/or change the data issuers under the
threshold are required to submit (e.g., require less data)? If a
permitted payment stablecoin issuer, or its insured depository
institution parent, currently files a Call Report, should it also be
required to submit the quarterly report required under proposed Sec.
15.14(i)? If so, why? If not, why not? If a permitted payment
stablecoin issuer, or its insured depository institution parent,
currently files a Call Report, should the quarterly report under
proposed Sec. 15.14(i) be attached to the Call Report as an appendix
as opposed to a separate filing? If so, why? If not, why not? Are there
changes that should be made to the Call Report to ensure appropriate
reporting while limiting duplicative reporting requirements? Should
reports required under proposed Sec. 15.14(i) and proposed part 15
more generally be coordinated and developed on an interagency basis
across the federal payment stablecoin regulators?
Question 133: In addition to requiring a monthly report of a
permitted payment stablecoin issuer's reserve asset composition, should
the OCC also require a permitted payment stablecoin issuer to publish a
report of the reserve asset composition as of a day randomly selected
each month by the permitted payment stablecoin issuer's registered
public accounting firm?
Question 134: How can the OCC best minimize duplication of reports,
including for permitted payment stablecoin issuers subject to the audit
requirement contained in proposed Sec. 15.14(l)? Should the OCC
include in the rule text its interpretation of ``applicable auditing
standards'' under section 4(a)(10)(A)(iii) of the GENIUS Act (12 U.S.C.
5903(a)(10)(A)(iii)) to mean those that would apply if the permitted
payment stablecoin issuer were subject to the reporting requirements
under section 13(a) or 15(d) of the Securities and Exchange Act of 1934
(15 U.S.C. 78m, 78o(d))? Should the OCC also include in the rule text
that the standards would be enforced by the OCC for permitted payment
stablecoin issuers subject to the audit requirement under section
4(a)(10)(A)(iii) of the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(iii))?
Should the OCC also include in the rule text that it may at any time
request that a registered public accounting firm provide to the OCC
certain additional information or documents relating to information
provided by the permitted payment stablecoin issuer and that the
registered public accounting firm must agree to provide copies of any
working papers, policies, and procedures relating to services in
connection with the audit required under section 4(a)(10)(A)(iii) of
the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(iii))?
Question 135: Should the OCC apply the requirement in section
6(a)(2)(D) of the GENIUS Act (12 U.S.C. 5905(a)(2)(D)) to all permitted
payment stablecoin issuers, rather than only to Federal qualified
nonbank payment stablecoin issuers, as proposed?
Question 136: The OCC is proposing that Federal qualified payment
stablecoin issuers report to the OCC the total aggregate value of their
assets under custody (as part of the quarterly report described in
Sec. 15.14(i) of the proposal). For purposes of this calculation, the
OCC is proposing that the private keys used to issue payment
stablecoins, as discussed in Section 10 of the GENIUS Act, should be
valued at a nominal $1.00 valuation. This reporting convention would
prevent double-counting of the private key and the associated payment
stablecoin reserves. What are the advantages and disadvantages of this
approach? Are there specific risks or information gaps related to the
custody of these private keys that would not be identified by this
reporting convention, including for example, where the covered
custodian of the private key used to issue payment stablecoins is not
also the custodian of all of the associate payment stablecoin reserves?
Are there alternative methods to avoid double-counting? For example,
what are the advantages and disadvantages of valuing the private key
used to issue a payment stablecoin at the par-value of issuance of the
associated payment stablecoin less the fair market value of any
associated payment stablecoin reserves that the covered custodian holds
under custody?
Question 137: Is the change in control requirement in proposed
Sec. 15.14(m) appropriately calibrated for permitted
[[Page 10262]]
payment stablecoin issuers? If not, what changes should the OCC
incorporate into this provision? Are there elements of 12 CFR 5.50 that
should or should not be incorporated into Sec. 15.14(m)? Should the
regulation explicitly provide the consequences for failing to meet the
requirements of proposed Sec. 15.14(m)? For example, should the OCC
include a paragraph that would provide that, if a person acquires
control, as the term is used at 12 CFR 5.50, of a permitted payment
stablecoin issuer without following the requirements of 12 CFR 5.50 as
if the permitted payment stablecoin issuer were a national bank before
the time for the OCC's review as provided in 12 CFR 5.50 has expired or
after the OCC has disapproved the acquisition of control, the permitted
payment stablecoin issuer: (i) must, within 15 calendar days of the
acquisition of control, provide all information required under 12 CFR
5.50; and (ii) may be subject to supervisory or enforcement actions
relating to any concerns arising from the change in control, consistent
with applicable law?
State Issuers
Question 138: For purposes of determining whether a State qualified
payment stablecoin issuer has crossed the $10 billion outstanding
issuance value threshold, should the $10 billion threshold be based on
a point of time or using a rolling average over some period of time
(e.g., the previous four calendar quarters)? Should the $10 billion
threshold take into account the outstanding issuance value of any
payment stablecoins issued by non-consolidated affiliates of the State
qualified payment stablecoin issuer?
Question 139: Under section 4(d) of the GENIUS Act (12 U.S.C.
5903(d)), a State qualified payment stablecoin issuer with total
outstanding issuance in excess of $10 billion must transition to the
Federal regulatory framework within 360 days or else cease issuing new
payment stablecoins until its total outstanding issuance is below the
$10 billion threshold. Should the OCC adopt a regulation that would
provide a mechanism for nonbank State qualified payment stablecoin
issuers that have transitioned to the Federal regulatory framework to
transition back to the applicable State regulatory framework if the
issuer's outstanding issuance value has decreased below $10 billion? If
so, should the mechanism explicitly include factors designed to prevent
evasion of the enforcement of the GENIUS Act? For example, what factors
should the OCC consider to determine whether a State qualified payment
stablecoin issuer intentionally reduced its outstanding issuance value
to avoid imminent and adverse OCC enforcement or supervisory actions
(e.g., the timing or value of the issuer's decrease in its outstanding
issuance)? Should the OCC use its waiver authority under section
4(d)(3) of the GENIUS Act to permit issuers that have transitioned to
the Federal regulatory framework to transition back to the applicable
State regulatory framework?
Question 140: Are there any technical, operational, or other
factors that would prevent a State qualified payment stablecoin issuer
from providing written notification within five calendar days as
proposed under Sec. 15.15(b)? Should the OCC consider alternate
timeframes, including shorter timeframes (e.g., within one day) or
longer timeframes (e.g., within ten days) for providing written
notification?
Question 141: Should the OCC require that the State qualified
payment stablecoin issuer provide additional information in its notice
under Sec. 15.15(b)? Should the OCC require a State qualified payment
stablecoin issuer to provide specific reports or information in
connection with a waiver request, such as the examples listed in the
supplementary information? If so, please provide examples.
Question 142: The OCC is considering whether to implement standards
when evaluating the past operations and exam history of a nonbank State
qualified payment stablecoin issuer. For example, the OCC may require
that, for an issuer to be eligible for a waiver, it must not have been
cited for violations or have outstanding supervisory concerns relating
to fraud, cybersecurity, technology infrastructure, and operational
disruptions within the past examination cycle. Should the OCC consider
standards related to an issuer's supervisory ratings?
Question 143: Should waivers from OCC supervision for State
qualified payment stablecoin issuers that are nonbank entities be
subject to renewal over some time period (e.g., one or five years) to
ensure that the State qualified payment issuer continues to meet the
criteria for the waiver?
Question 144: Should the OCC reserve the right to discontinue a
waiver? If so, is 100 days a reasonable period to provide notice to the
State qualified payment stablecoin issuer that is a nonbank entity?
Question 145: Is the requirement to submit an analysis of capital
in proposed Sec. 15.15(b)(3) appropriately calibrated? Should the
State qualified payment stablecoin issuer that is a nonbank entity be
required to submit the report sooner after reaching $10 billion in
outstanding issuance value (e.g., 180 days, 200 days, 250 days)?
Question 146: Is the timeframe for the initial OCC examination
after transition to the Federal regulatory framework in proposed Sec.
15.15(c) appropriate? Should the timeframe be shorter (e.g., three
months, four months) or longer (e.g., nine months, 12 months)?
Unusual and Exigent Circumstances
Question 147: Are there additional criteria or information sources
the OCC should consider when determining whether unusual and exigent
circumstances exist? For example, the Act does not mandate information
sharing agreements between the OCC and State payment stablecoin
regulators, and the OCC may have limited visibility into the activities
and conditions of State qualified payment stablecoin issuers. Should
the OCC consider, for example, whether a State payment stablecoin
regulator or a State qualified payment stablecoin issuer has made a
request for the OCC to exercise its unusual and exigent circumstances
authority? Should the OCC consider significant price fluctuations in
the secondary market for the State qualified payment stablecoin
issuer's payment stablecoin? Should the OCC consider whether the State
qualified payment stablecoin issuer has been, or will imminently be,
unable to timely redeem its payment stablecoin? Should the OCC consider
whether the State qualified payment stablecoin issuer has incurred
significant unanticipated losses? Should the OCC consider whether the
State qualified payment stablecoin issuer has deployed nonstandard
liquidity management tools?
Question 148: Should the OCC make public when it determines that
unusual and exigent circumstances exist? If so, what information should
the OCC include (or not include) in any publication regarding unusual
and exigent circumstances?
Custody
Question 149: Are the proposed definitions for terms relevant to
this section appropriate and sufficiently clear? Would it be helpful to
define any other terms?
Question 150: The OCC has interpreted ``cash and other property''
to refer to the cash and other property that a covered custodian may
receive as custodial property of its customers, but only to the extent
such cash or other property is received in connection with the
provision of custodial services for the Act's three core custody
assets. Is this the appropriate approach? Should
[[Page 10263]]
the OCC take a broader view of what constitutes ``cash and other
property''? What are the costs and benefits of such an approach? Does
the proposal appropriately address the different requirements for
noncash covered assets and ``cash on deposit'' covered assets held at
an insured depository institution?
Question 151: The OCC is proposing to define covered assets in such
a way that the requirements of sections 10(a), (b), and (c) of the Act
(12 U.S.C. 5909(a)-(c)) would apply to all covered assets and is
proposing to apply the substantive requirements of those sections as a
connected set of requirements. However, sections 10(a), (b), and (c) of
the Act use slightly different wording when describing the assets to
which each subsection applies and some of the substantive requirements
that apply.\129\ The OCC believes that the provisions should be read
together to cover the same set of assets and to provide a cogent and
harmonized set of requirements for covered custodians.\130\ Instead of
the proposed approach, should the OCC use the precise statutory
language regarding the scope of assets covered separately in paragraphs
(a), (b), and (c)? What are the advantages or disadvantages of doing
so?
---------------------------------------------------------------------------
\129\ For example, Section 10(a) of the Act refers to ``the
payment stablecoin reserve, the payment stablecoins used as
collateral, or the private keys.'' 12 U.S.C. 5909(a). Section 10(b)
refers to ``the payment stablecoins, private keys, cash, and other
property.'' 12 U.S.C. 5909(b). Section 10(c) refers to ``[p]ayment
stablecoin reserves, payment stablecoins, cash, and other
property.'' 12 U.S.C. 5909(c).
\130\ For example, sections 10(b) and (c) of the Act refer to
section 10(a), suggesting that the provisions are meant to be read
together to cover the same set of assets.
---------------------------------------------------------------------------
Question 152: Proposed subpart C would implement section 10 of the
GENIUS Act (12 U.S.C. 5909) with respect to entities that are regulated
by the OCC. Are there issues that the OCC should bear in mind if an
OCC-regulated entity holds reserve assets on behalf of a stablecoin
issuer that is not regulated by the OCC and may not be familiar with
the OCC's implementation of section 10 of the GENIUS Act?
Question 153: The OCC is proposing applying these principles-based
requirements on covered custodians subject to OCC supervision, rather
than requiring OCC-supervised institutions that seek to custody a
covered asset to only custody such assets with a custodian that can
demonstrate it complies with certain minimum requirements. What are the
costs and benefits of this approach, including with regards to
administrability, jurisdiction, and the promotion of fair competition?
Question 154: The OCC proposes principles-based requirements in
line with sound custodial management practices that the agency
understands are industry standard. Does the proposal accurately capture
sound custodial management practices that are industry standard?
Question 155: Does the proposal provide enough detail regarding
what steps are appropriate for a covered custodian to protect the
covered assets of covered customers from the claims of creditors of the
covered custodian? Would more prescriptive or specific requirements be
appropriate to implement the requirements of the Act? For example,
should the OCC require a covered custodian to take appropriate steps to
protect the covered assets of covered customers from the claims of
creditors of the covered custodian, including through adopting,
implementing, and maintaining written policies, procedures, and
internal controls adequate for (A) the safekeeping of covered assets of
covered customers; (B) the documentation of covered customer
relationships through one or more written custody agreements; (C)
recording and verifying the covered assets of covered customers; and
(D) the conducting of due diligence in the selection of and periodic
monitoring of sub-custodians, in each case commensurate with the
covered custodian's size, complexity, and risk profile and with the
nature of the applicable covered assets in its covered customer
relationships? What are the costs and benefits of prescriptive versus a
principles-based approach? How would either approach compare or
contrast with the non-covered asset custodial business of covered
custodians and what efficiencies or challenges might arise from each
approach?
Question 156: Is it sufficiently clear in a custodial relationship
when and for what assets the minimum, principles-based requirements of
subpart C would apply? For example, are there circumstances where a
custodian may be unaware that stablecoin assets held in an account are
being used as collateral and potentially subject to the requirements of
subpart C?
Question 157: The proposed rule describes how a custodian maintains
control of a stablecoin or tokenized stablecoin reserve assets. Is this
description appropriately calibrated? Are there other means by which a
custodian should be deemed to have demonstrated control over these
types of assets?
Question 158: Are there additional considerations the OCC should
take into account regarding a covered custodian's use of an omnibus
account? For example, should the OCC consider a high-level principals-
based approach to apply generally to a covered custodian's provision of
custodial or safekeeping services to covered customers for covered
assets while utilizing a more detailed regulatory framework regarding a
covered custodian's use of omnibus accounts? Alternatively, to what
extent should the OCC consider proposing that a covered custodian may,
for convenience, commingle in a single omnibus account both covered
assets and other custodial assets that are not covered assets? What
efficiencies and challenges would such an approach raise? Are there
additional risk considerations the OCC should consider if it takes such
an approach? For example, to what extent should the OCC consider
prescribing additional recordkeeping, customer account, disclosure, or
other terms or conditions as a precondition to a covered custodian
commingling covered assets and non-covered assets?
Question 159: Regarding the proposed rule governing the withdrawal
of custodial covered assets to pay certain commissions, taxes, storage,
and other charges, should the OCC require any more prescriptive
customer protection requirements, such as those designed to ensure that
such withdrawals do not cause any reserve to fall below any minimum
coverage of a payment stablecoin? What are the costs and benefits of
these or any similar approach? For example, in order to implement an
effective compliance system, would such a requirement impose undue
burdens on a custodian from withdrawing any permitted funds from a
custodial account that contains payment stablecoin reserves?
Question 160: Section 10(c)(3) of the GENIUS Act provides a
priority regime regarding the claims of covered customers against a
covered custodian with regards to any payment stablecoins used as
collateral. The section also allows covered customers to expressly
waive this priority. What are the potential benefits and drawbacks of
such a priority regime, including with regards to whether it may
amplify losses to payment stablecoin issuers on payment stablecoin
reserves that are custodied by a covered custodian that provides a
diversified custodial business should there be a shortfall in a covered
custodian's custodied assets? What market practices do commenters
believe are likely to arise regarding the use of the contractual
provisions that
[[Page 10264]]
waive a covered customer's priority regarding payment stablecoins used
as collateral that are held in custody? To what extent should the OCC
consider either providing guidance on the use of such contractual
provisions or requiring covered custodians to use such contractual
provisions in their custody agreements? How are customer waivers in
relation to covered custodians likely to impact the resolution of
permitted payment stablecoin issuers? For example, would they lead to
additional complications in determining the priority of claims?
Question 161: The GENIUS Act provides an exclusion from the
custodial requirements to any person solely on the basis that such
person engages in the business of providing hardware or software to
facilitate a customer's own custody or safekeeping of the customer's
payment stablecoins or private keys. The OCC proposes to clarify that
it would not consider certain activities to constitute ``solely''
providing hardware or software to facilitate custody or safekeeping of
payment stablecoins or private keys. Should the OCC consider
implementing any other language to prevent the exception from being
used to evade the custodial requirements of the Act? Alternatively,
could an OCC-supervised institution provide ancillary custodial
services to a user of such hardware or software (e.g., facilitating the
customer's crypto-asset and fiat currency exchange transactions,
transaction settlement, trade execution, recordkeeping, valuation, tax
services, reporting, or other appropriate services) while avoiding the
minimum, principles-based requirements of the proposal?
Question 162: Are there particular circumstances for which the OCC
should provide additional clarification as to the application of
subpart C or the applicability of any exception (e.g., regarding
payment stablecoins locked in a smart contract for purposes of
``wrapping'' the payment stablecoin for use on an unsupported
blockchain)?
Question 163: In order to ensure that a permitted payment
stablecoin issuer is able to meet redemptions on a timely basis, should
the OCC require that any custody agreement a covered custodian enters
into with a permitted payment stablecoin issuer provide for prompt
release of any custodied covered assets to the covered customer's
control? For example, should a custody agreement require that a covered
custodian have the ability to transfer control of covered assets
comprising payment stablecoin reserves, or execute and settle at the
covered customer's direction any such assets, within a specific
timeframe? What are the costs and benefits of any such approach?
Question 164: To what extent are Schedule RC-T of the Call Report,
in the case of national banks, Federal savings associations, or Federal
branches, and the portions of the reports required under proposed Sec.
15.14 relevant to custodial activities, in the case of non-bank Federal
qualified payment stablecoin issuers and applicable State qualified
payment stablecoin issuers, appropriate to ensure that the OCC
possesses the information necessary to supervise covered custodians? If
other forms of reporting would be helpful, what are they? If other
types of information would be helpful, what are they? What are the
costs and benefits of more detailed reporting requirements?
Question 165: To the extent a covered custodian with fiduciary
powers provides fiduciary services to a covered customer in connection
with the customer's covered assets, are the existing requirements in 12
CFR part 9 or 150, as applicable, appropriate to implement the GENIUS
Act? Are there any efficiencies or challenges generated between the
requirements in the GENIUS Act, the requirements proposed in subpart C,
and the fiduciary activities requirements in 12 CFR part 9 or 150?
Should the OCC consider leveraging the compliance regime in 12 CFR part
9 in connection with the portion of a covered custodian's provision of
custodial or safekeeping services for covered assets that is conducted
in a fiduciary capacity?
Question 166: Does the proposed approach regarding custody of
covered assets proposed in subpart C, or any alternative approach
discussed in comments or suggested by commenters, pose any concerns
regarding fair competition between covered custodians and entities that
are otherwise permissible custodians under section 10(a) of the GENIUS
Act but which are not supervised by the OCC?
Applications and Registrations
Question 167: Should the OCC explicitly provide in regulation that
the application process under proposed Sec. 15.30 supersedes all other
filing requirements in OCC regulations related to issuance of
stablecoins?
Question 168: Should the OCC establish any other factors in Sec.
15.30 to ensure the safety and soundness of the applicant permitted
payment stablecoin issuer? Should the OCC include as a factor the
applicant's ability to conduct its proposed activities in a safe and
sound manner? Are there other, more specific, criteria relating to
safety and soundness that the OCC should consider?
Question 169: The OCC specifically requests comment on the proposed
standards for issuing a waiver under proposed Sec. 15.30(f) and
whether the OCC should consider any other facts in deciding to grant a
waiver.
Question 170: How should the OCC evaluate whether reserves held by
foreign payment stablecoin issuers in the United States are sufficient
to meet the demands of United States customers? Will foreign payment
stablecoin issuers be able to reliably determine which of their
customers are United States customers? Should the amount of reserves
held in the United States be required to exceed by some margin (e.g.,
50 percent) the estimated one-month redemptions by United States
customers? Should the amount of reserves held in the United States be
based on the estimated number of United States holders of the payment
stablecoin issued by the foreign payment stablecoin issuer? Is some
other method appropriate for determining the amount of reserves that
must be held in United States institutions? How are foreign payment
stablecoin issuers likely to determine whether their customers are
located in the United States? Are they likely to have access to
sufficient information to make this determination? Is the scope of
United States institutions in which a foreign payment stablecoin issuer
may hold reserve assets appropriately calibrated? Should it include any
other eligible financial institutions?
Question 171: Should the OCC require different or additional
information to be reported by foreign payment stablecoin issuers? If
so, what additional information should the OCC require? How frequently
should the OCC require such information? Should any additional
information be made public? Should the OCC expressly require foreign
payment stablecoin issuers to provide the same reports, publish the
same reports, and make and publish the same certifications as permitted
payment stablecoin issuers? If not, what modifications to the
reporting, publication, and certification requirements would be
appropriate for foreign payment stablecoin issuers?
Question 172: In proposed Sec. 15.30 related to approval of
permitted payment stablecoin issuers and in proposed Sec. 15.32
related to the registration of foreign payment stablecoin issuers,
should the OCC require that a permitted payment stablecoin issuer or a
foreign issuer be allowed to only issue a single type (i.e., brand) of
payment stablecoin? What
[[Page 10265]]
other arrangements designed to ensure legal separateness with respect
to the reserve assets backing a particular brand of payment stablecoin
should the OCC consider? For example, should the OCC require a
permitted payment stablecoin issuer (or its parent company) to hold
reserves in a special purpose, bankruptcy remote vehicle that is fully
capitalized by the issuer and has no liabilities. What are the merits
of these arrangements relative to requiring each issuer to issue only
one brand of payment stablecoin? If the OCC requires a separate issuer
for each brand of payment stablecoin, should the OCC streamline the
approval process for certain applicants (e.g., by only requiring the
applicant to provide notice if the parent or affiliate of the new
issuer has previously received approval to act as a permitted payment
stablecoin issuer)? In the absence of a restriction on issuing more
than one brand of stablecoin, how would issuers ensure that reserve
assets are properly legally and operationally allocated to the backing
of each brand of stablecoin? Are there any other issues or challenges
that permitted payment stablecoin issuers could encounter in complying
with the Act in the absence of such a restriction? If the OCC were to
impose any of the requirements on issuers as described above, how would
these requirements interact with State qualified payment stablecoin
issuers that transition to the Federal regulatory framework that are
not subject to the approval process by the OCC? To ensure equitable
treatment across OCC-regulated entities, should the OCC, for example,
prohibit all permitted payment stablecoin issuers from issuing more
than one brand of payment stablecoin (per legal entity) in Sec. 15.10?
Question 173: Proposed Sec. Sec. 15.31 and 15.32 refer to foreign
payment stablecoin issuers holding reserve assets in United States
financial institutions, consistent with section 18(a)(3) of the Act (12
U.S.C. 5916(a)(3)). Should the OCC further define ``financial
institution'' for the purposes of these provisions? For example, the
OCC could determine that the reserves must be held at State chartered
depository institutions, insured depository institutions, national
banks, or trust companies. These are the entities where permitted
payment stablecoin issuers' stablecoin reserves may be commingled in an
omnibus account under section 10(c)(2)(A) of the GENIUS Act (12 U.S.C.
5909(c)(2)(A)). Should the regulation state that the reserve assets
must be held with United States eligible financial institutions?
Question 174: Should the OCC apply the capital requirements in
proposed subpart E to the United States operations of foreign payment
stablecoin issuers registered with the OCC? If so, how should the OCC
modify these capital requirements to appropriately apply to the United
States operations of foreign payment stablecoin issuers?
Question 175: Are there particular requirements that apply to
permitted payment stablecoin issuers that should or should not apply to
foreign payment stablecoin issuers? Please describe any such
requirement and why the requirement should or should not apply.
Question 176: Section 5 of the GENIUS Act (12 U.S.C. 5904) refers
to ``substantially complete'' applications for permitted payment
stablecoin issuers, but section 18 of the Act (12 U.S.C. 5916) does not
refer to ``substantially complete'' applications with respect to
foreign payment stablecoin issuers registering with the OCC (section 18
does refer to a ``substantially complete'' determination request to the
Department of the Treasury). For parity, should the implementing
regulations refer to a ``substantially complete'' application for both
types of entities?
Capital
Question 177: Are the proposed requirements for capital elements
appropriate and sufficiently clear? Should the OCC consider permitting
tier 2 capital in the form of subordinated debt, similar to the
permitted capital element for a national bank? Should the OCC consider
establishing limits on how much capital of each tier should be required
or allowed? Alternately, should the OCC adopt a simpler measure of
capital, such as anything that qualifies as equity under GAAP, instead
of importing the bank framework for capital instruments? Should the OCC
use tangible equity (retained earnings, stock, and preferred stock, net
of tangible assets) as the measure of capital for a permitted payment
stablecoin issuer?
Question 178: Should the OCC require deductions from regulatory
capital for goodwill, certain deferred tax assets, or other illiquid or
intangible assets, recognizing that these assets may not provide
sufficient loss absorbency during a business disruption, and may
experience volatility in value or writedowns that could deplete
retained earnings? Please provide any data supporting your views.
Question 179: Are the proposed components and determination of the
minimum capital and backstop requirements appropriate for permitted
payment stablecoin issuers? Which alternatives, if any, should the OCC
consider and why? Should the requirements include any adjustments in
recognition of newly acquired or divested businesses, or any other
adjustments when calculating total expenses for purposes of the
proposed backstop? Please provide any data supporting your views.
Question 180: Is the $5 million minimum capital requirement for a
de novo permitted payment stablecoin issuer appropriate?
Question 181: Should the OCC incorporate a capital requirement
based on the outstanding issuance value or amount and type of reserve
assets, including variations of any of the proposals discussed above?
For example, should the OCC impose a minimum capital requirement based
on a set percentage of outstanding issuance value, as discussed above
in this supplementary information? If so, are the minimum capital
requirements and thresholds discussed above appropriately calibrated?
Please provide any data supporting your views.
Question 182: Should the OCC adopt a capital requirement based on
price risk, credit risk, operational risk, or interest rate risk,
including variations on any of the proposals discussed above? Please
provide any data supporting your views. For example, should the OCC
impose a charge for credit risk, such as a 2 percent capital charge for
uninsured deposits? Should the OCC impose a capital charge to reflect
the interest rate risk of certain reserve assets, such as Treasury
securities? Should the OCC impose a minimum operational risk capital
charge that scales with the size of the issuer, as discussed above
(i.e., with a charge of 1 percent for small issuers with a smaller
additional marginal charge applying at certain thresholds)? Should any
such operational charge be based, in part, on the issuer's recent
losses?
Question 183: Should the OCC adopt a capital requirement based on
assets held in custody by permitted payment stablecoin issuers? If so,
how should that requirement be calibrated? Please provide any data
supporting your views.
Question 184: Should the OCC adopt a capital requirement expressly
designed to address costs of litigation, legal risk, or legal costs
during insolvency that a permitted payment stablecoin issuer may face?
If so, how should such a requirement be calibrated?
Question 185: Should the capital and backstop requirements be
calculated
[[Page 10266]]
based as of the last day of a given quarter, as proposed? Should the
amount instead be calculated across some other period of time, such as
an average on a monthly, bi-monthly, biannually, or yearly basis?
Question 186: Is the timing for the stablecoin issuer to meet
capital and backstop requirements appropriate? Are the resulting
activity limitations for failing to meet those requirements
appropriate?
Question 187: Are there any advantages or disadvantages to setting
capital requirements for permitted stablecoin issuers consistent with
or different from those set by non-United States regulators? The
proposed approach to determining capital requirements is less
prescriptive than approaches adopted or proposed in certain foreign
jurisdictions. Are there any advantages or disadvantages to setting
capital requirements for permitted payment stablecoin issuers
consistent with the approaches adopted by those jurisdictions?
Question 188: Are the proposed criteria for imposing an individual
additional capital or backstop requirements appropriate and
sufficiently clear? For example, should the OCC define what constitutes
``excessive volatility?''
Question 189: Should the OCC adopt alternative capital calculations
for uninsured national trust banks? Should those alternative
requirements depend upon whether the trust bank issues a payment
stablecoin? Is the proposal to allow trust banks to elect the part 15
framework appropriate, or should the OCC consider establishing an
alternative capital requirement? Would the proposed capital requirement
create a competitive imbalance between standalone national trust banks
and trust departments of insured national banks? Is the proposed
requirement that national trust banks that opt into the part 15
framework still largely follow the definition of capital under part 3,
subpart C appropriate, or should proposed Sec. 15.40 apply instead?
Please provide any data supporting your views.
Question 190: Instead of satisfying risk-based or leverage capital
requirements, a Federal branch must maintain a capital equivalency
deposit. This deposit is calculated in part based on total liabilities
of the Federal branch and would include any liabilities associated with
a stablecoin program. Are there options the OCC should consider with
respect to calculation of the capital equivalency deposit for a Federal
branch's stablecoin program?
Assessments
The OCC invites comments on all aspects of the proposal with
respect to the proposed revisions to 12 CFR part 8, including the
proposal to discount assessments on assets attributable to required
stablecoin reserves, and the following questions:
Question 191: The OCC invites comment on whether there is reason to
believe that the existing assessment structure in Sec. 8.2, as
amended, or the proposed assessment structure under subpart B will not
adequately and appropriately enable the OCC to fund its supervisory
activities in connection with institutions' GENIUS Act-related
activities. Should the OCC consider imposing assessments based on
different or additional measurements to account for increased
supervision activities it will undertake in connection with supervising
the GENIUS Act-related activities of these institutions?
Question 192: The OCC currently expects to receive all information
necessary to impose assessments on each national bank or Federal
savings association for GENIUS-act related activities as proposed here
from existing Call Report data and the supplementary reports proposed
in this notice. Is there reason to believe that this is not the case?
For example, the OCC currently relies upon Schedule RC-T to capture the
``fiduciary and related assets'' upon which independent trust banks pay
assessments under Sec. 8.6(c). Is there any reason to believe that the
custodial or safekeeping assets attributable to the activities
described in 12 U.S.C. 5901 et seq would not be fully represented in
Schedule RC-T and therefore in the assessments of national banks and
Federal savings associations that remain subject to assessment under
Sec. 8.6(c)? Is there any necessary information that might not be
captured?
Question 193: To the extent the OCC should permit combinations of
chartered and non-chartered institutions subject to the agency's
jurisdiction to own a stablecoin issuing subsidiary, how should the OCC
best ensure that the agency receives full contributions for assessed
amounts? Under one option, the OCC could require each owner of a
stablecoin issuing subsidiary to specifically report the amount and
type of assets attributable to GENIUS Act-related activities listed on
their Call Reports, Schedules RC-T, and any reporting pursuant to 12
CFR 15.14 (as applicable) so that the OCC can confirm it has received
the proper assessed amount attributable to the issuing subsidiary's
GENIUS Act-related activities. The agency under this option would
likely retain discretion to decide whether to assign financial
responsibility to each owner, or one or more owners (e.g., the majority
owner), to eliminate any assessment shortfall that may exist in
connection with the subsidiary's activities. However, the OCC seeks
comment and information on other methods to ensure that it receives
full assessments in connection with an issuing subsidiary owned by two
or more institutions subject to OCC jurisdiction.
Question 194: Should the OCC have a mechanism to account for
voluntary over-collateralization of reserve assets? In proposing to
discount assessments attributable to an issuer's on-balance sheet
required reserve assets, the OCC considered but declined to propose an
extension of that discount to over-collateralized reserve assets (or,
more broadly, to exclude over-collateralized amounts from assessments
overall). As noted, while the OCC does not wish to disincentivize over-
collateralization, the agency is concerned that extending the proposed
discount to over-collateralized reserves may encourage some
institutions to mischaracterize the status of certain on-balance sheet
assets as reserves to minimize their overall assessment. The OCC also
preliminarily concludes that assessing voluntary over-collateralized
stablecoin reserve amounts at undiscounted rates will not meaningfully
influence an issuer's business judgment on whether and to what extent
it should voluntarily over-collateralize its on-balance sheet
stablecoin reserves. Nevertheless, the OCC seeks comment and any
information that would support extending the proposed discount to
voluntary over-collateralized reserves. If the agency ultimately
concludes that an extension of the discount (or a carve out for
voluntary over-collateralization) is appropriate, should the OCC cap
the discount (or the carve out) for the voluntary over-
collateralization at an amount equal to between one to five percent of
required reserves, reflecting the agency's understanding that current
stablecoin reserve voluntary over-collateralization typically occurs
within this range? If one to five percent is not the correct range,
what range would be appropriate?
Question 195: The OCC considered, but preliminarily declines, to
set a required stablecoin reserve asset threshold above which the
agency would impose either a series of graduated additional discounts
or a cap for purposes of calculating assessments. The OCC has
occasionally adopted a similar approach when warranted by
circumstances. For example, the agency
[[Page 10267]]
currently places a similar asset-based cap (currently set at $250
billion) on the calculation of the problem bank surcharge paid by banks
that require increased supervisory resources. A required stablecoin
reserve asset threshold could be appropriate if the OCC were confident
that assessment revenues obtained on stablecoin reserve assets above a
certain threshold would be disproportionate to the marginal cost of
supervising GENIUS Act-related activities attributable to those assets.
However, the agency preliminarily concludes it lacks sufficient
certainty of its future supervisory needs to determine with confidence
the threshold above which this circumstance would arise. The agency
nevertheless seeks comment and any information to better assess whether
there is a reserve asset threshold above which it would be appropriate
to impose either a series of graduated additional discounts or a cap
for purposes of calculating assessments.
Question 196: As noted, the OCC will rely on weekly and quarterly
reporting under proposed Sec. 15.14 to determine the appropriate
semiannual assessment amount due from each supervised institution in
connection to their GENIUS Act-related activities. The OCC requests any
information and comment regarding the adequacy of these reports for
these purposes. For example, is the OCC using the correct reports? Is
there any concern that the OCC will have too few data points to measure
rolling reserve assets? Should the OCC require reporting on a rolling
daily or weekly basis, directly to the OCC? Should the required
reporting be focused on the latest figures, the highest figures, the
median, or the mean? Should the OCC leverage the proposed weekly
reporting required under proposed Sec. 15.14(h)?
Question 197: The OCC considered whether to reduce assessment for
institutions subject to subpart B whose GENIUS Act-related activities
would be subject to joint or coordinated review as between the OCC and
either State permitted stablecoin regulators or foreign payment
stablecoin regulators.\131\ The appropriateness of assessing one or
more classes of institutions subject to subpart B at lower rates would
depend on whether the cost of supervising those institutions' GENIUS
Act-related activities is in fact shared jointly with another regulator
such that the cost to the OCC is meaningfully lower than the cost of
assessing national banks and Federal savings associations. Based on the
OCC's supervisory experience in similar circumstances involving joint
or coordinated circumstances, in the agency's judgement it is not
likely that the costs will be any lower. The OCC nevertheless seeks
comments or any information that may support adopting alternative
assessment methodologies under proposed subpart B for all or a subset
of institutions subject to subpart B and subject to joint or
coordinated supervision in connection with their GENIUS Act-related
activities, such as applying a discount in the range of 35 to 55
percent to Foreign or State qualified payment stablecoin issuers, or
both, to reflect shared supervisory jurisdiction. In addition, the OCC
requests comment on whether the 35 to 55 percent range is appropriate.
---------------------------------------------------------------------------
\131\ As noted, State chartered depository institutions that
exceed the $10 billion in consolidated total outstanding issuances
threshold are subject to the supervision of the OCC and the State
payment stablecoin regulator acting jointly, and nonbank State
qualified payment stablecoin issuers that exceed the $10 billion in
consolidated total outstanding issuances threshold are subject to
the supervision of the OCC and the State payment stablecoin
regulator acting in coordination. Likewise, Foreign qualified
payment stablecoin issuers will be subject to the supervision of
foreign payment stablecoin regulators, as well as the OCC in
connection with certain GENIUS Act-related activities.
---------------------------------------------------------------------------
General Request for Comment
Question 198: Does the proposed rule fulfill the GENIUS Act's
mandate to issue regulations necessary to ensure financial stability?
Are there other issues that the OCC should explicitly address, or risk
management requirements it should impose, to ensure financial
stability? Should the OCC collect any additional data in order to
monitor financial stability in accordance with the GENIUS Act? If so,
what data should it collect and how should it be collected?
Question 199: A permitted payment stablecoin issuer must be
obligated to convert, redeem, or repurchase its issued payment
stablecoins for a fixed amount of monetary value, not including a
digital asset denominated in a fixed amount of monetary value. Is
additional guidance needed on the accounting treatment for issued
stablecoins and the associated reserve assets? If so, what
considerations should factor into any such guidance (e.g., what legal
structures would be relevant to the accounting treatment)?
Question 200: What impact would the proposed rule have on credit
creation? How can the OCC minimize any negative impact to credit
creation?
Question 201: Should any additional aspects of the proposed rule be
adjusted based on the size of the permitted payment stablecoin issuer?
For example, are there additional aspects of the proposed rule that
should be applied exclusively to issuers with outstanding issuance
above a certain amount? Should the OCC measure the ``size'' of a
permitted payment stablecoin issuer by its outstanding stablecoin
issuance or is there a better measurement?
Question 202: Are there any aspects of the proposed rule that the
OCC should adjust to promote fair competition between banks and non-
banks?
Question 203: Should the proposed rule explicitly address permitted
payment stablecoin issuers that also issue/redeem the same or similar
stablecoins in one or more foreign jurisdictions? Could these issuers
be subject to additional risks or operational challenges that are not
sufficiently addressed by the proposed rule? To what extent should
stablecoin holders be able to distinguish between the same or similar
stablecoins issued under the GENIUS Act versus another regulatory
regime? If the holder should be able to establish that it is holding a
GENIUS Act compliant stablecoin, how should the OCC assist the holder
in making this determination? For example, should the OCC impose
required disclosures or technical requirements, such as through smart
contracts, including those that use wrappers or other techniques?
Question 204: What additional issues could arise with respect to a
business model where a foreign affiliate issues or redeems payment
stablecoins abroad? How should the OCC address these issues?
Question 205: Are there any other technical developments in
distributed ledger protocols, digital assets, or related technologies
that the proposed rule should address to ensure the purposes of the
GENIUS Act are being met? For example, should the OCC consider
automating aspects of reporting or oversight? Should the OCC
incorporate additional provisions concerning the use of smart contracts
when considering compliance with aspects of the proposed rule, such as
risk management? Are there dynamics relevant to particular blockchains
that could affect liquidity, redemption, operating risk, or run risk
that the OCC should consider and incorporate into any final rule?
Question 206: Are there any particular considerations that the OCC
should bear in mind or changes that the OCC should make with respect to
permitted payment stablecoin issuers that are owned or operated by a
consortium of other entities? In cases where the consortium includes
both State-chartered insured depository institutions and national banks
or Federal savings associations, which agency should be the primary
Federal payment stablecoin regulator
[[Page 10268]]
(e.g., the primary Federal payment stablecoin regulator of the majority
owner or owners)?
Question 207: Should the OCC adopt any new rules or change any
existing rules to implement the insolvency provisions of the GENIUS
Act? Should the OCC require permitted payment stablecoin issuers to
establish resolution plans?
Question 208: Section 12 of the GENIUS Act provides that the
primary Federal payment stablecoin regulators, in consultation with the
National Institute of Standards and Technology, and other relevant
standard-setting organizations, and State bank and credit union
regulators, shall assess and, if necessary, prescribe standards for
permitted payment stablecoin issuers to promote compatibility and
interoperability with other permitted payment stablecoin issuers and
the broader digital finance ecosystem. What efforts are issuers
currently taking to address challenges posed by interoperability? What
considerations should the regulators take into account in determining
whether standards are necessary? Would the promulgation of standards
help to broaden adoption of stablecoins?
Question 209: What are risks posed by different types of
interoperability solutions and how might issuers and regulators manage
those risks? How can interoperability solutions aid in addressing risks
facing issuers? What risks are introduced by cross-chain bridges and
other interoperability solutions and how do these risks interact with
BSA/AML and sanctions requirements? What steps can be taken to address
such BSA/AML and sanctions concerns?
Question 210: Is there anything else the OCC should do to address
potential fraud concerns in the context of a final rule? For example, a
bad actor may create fraudulent tokens intended to mimic a payment
stablecoin. Are there technical or other requirements the OCC should
impose to mitigate the potential for such fraudulent tokens to harm
consumers? For example, should authentic stablecoins be required to
have an electronic signature that can be verified by a recipient? Are
there other areas of potential fraud that the OCC should be aware of
and should attempt to mitigate in the final rule?
Question 211: What changes to existing rules should be made in
recognition of the GENIUS Act? For example, should the OCC revise 12
CFR part 44 or 50 to ensure that stablecoin reserves do not count
against relevant thresholds in those rules? Does 12 CFR part 44 pose
any substantial impediment for banking entities planning to engage in
permitted payment stablecoin activities? In particular, are there
aspects of 12 CFR 44.5, 44.6, or 44.20 that would present undue burden
or difficulties for a permitted payment stablecoin issuer that is
subject to 12 CFR part 44?
IV. Expected Effects
The OCC expects the primary effect of the GENIUS Act and the
proposed rule will be an increase in the aggregate market
capitalization of payment stablecoins in response to an increased
demand for payment stablecoins. While the OCC expects that payment
stablecoins would continue to be issued in the absence of the GENIUS
Act, the OCC anticipates that regulatory clarity and simplification
from the proposed rule will stimulate payment stablecoin issuance in
the short-run, beyond issuance that would have taken place in the
absence of the proposed rule. Consistent with the proposed rule, this
analysis assumes that permitted payment stablecoin issuers will not pay
the holder of a payment stablecoin any form of interest or yield solely
in connection with the holding, use, or retention of such payment
stablecoin and that certain arrangements with affiliates or related
third parties will be presumed to run afoul of this prohibition.
V. Regulatory Analysis
Paperwork Reduction Act
This notice of proposed rulemaking has been reviewed for compliance
with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.). In accordance with the PRA, the OCC may not conduct or sponsor,
and an organization is not required to respond to, an information
collection unless the information collection displays a currently valid
Office of Management and Budget (OMB) control number. The OCC has
reviewed the notice of proposed rulemaking and determined that it would
introduce new information collection requirements pursuant to the PRA.
The OCC is seeking a new control number for these information
collection requirements and have submitted them to OMB for review and
approval.
Proposed Information Collection
Title: Reporting, Recordkeeping, and Disclosure Requirements
Associated with 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.
OMB Control No.: 1557-NEW.
Type of Review: Regular.
Affected Public: Businesses or other for-profit.
Description: Twelve CFR part 15 sets forth the OCC's Guiding and
Establishing National Innovation for U.S. Stablecoins Act (12 U.S.C.
5901 et seq.) regarding the issuance of payment stablecoins and certain
related activities by entities subject to the OCC's jurisdiction.
The information collection requirements in the proposed rule are as
follows:
Reporting Requirements
Section 15.10(c) sets forth prohibitions that would apply to
permitted payment stablecoin issuers, including a prohibition on paying
interest or yield to payment stablecoin holder solely in connection
with the holding, use, or retention of a payment stablecoin. Section
15.10(c)(4)(i) would establish a presumption that certain arrangements
with affiliates or related third parties violates this prohibition.
Under Sec. 15.10(c)(4)(iii) a permitted payment stablecoin issuer
would be able to rebut the presumption described in Sec.
15.10(c)(4)(i), by submitting written materials that demonstrate that
the contract, agreement, or other arrangement is not prohibited under
Sec. 15.10(c)(4) and is not an attempt to evade the prohibition.
Section 15.10(c)(5)(iii)(B) would permit creating liquidity to meet
reasonable expectations of requests to redeem payment stablecoins, such
that reserves in the form of Treasury bills with a maturity of 93 days
or less may be sold as purchased securities in repurchase agreements,
after receiving the prior approval from the OCC, notwithstanding a
general prohibition against pledging, rehypothecating, or reusing
reserve assets.
Section 15.11(a)(2) would require that permitted payment stablecoin
issuers 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.
Section 15.11(g)(1) would require a permitted payment stablecoin
issuer to notify the OCC, through its OCC supervisory office, on any
day in which its reserve asset amount has fallen below the required
minimum in Sec. 15.11(a). Under Sec. 15.11(g)(4) if the OCC
determines that a permitted payment stablecoin issuer has not
demonstrated that it meets the reserve asset requirements in 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
[[Page 10269]]
will attain compliance in a specified number of days.
Section 15.12(c)(4) provides that a permitted payment stablecoin
issuer would be required to provide notice to the OCC within 24 hours
if its redemption requests exceed 10 percent of its outstanding
issuance value in a single 24-hour period.
Section 15.13(a)(3) would require a permitted payment stablecoin
issuer to 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 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.
Section 15.13(b)(7) sets forth notification of unauthorized access
requirements that would apply to permitted payment stablecoin issuers.
Section 15.13(b)(7)(i) would require that, when a permitted payment
stablecoin issuer becomes aware of an incident of unauthorized access
to sensitive customer information, including a customer's private key,
the permitted payment stablecoin issuer must conduct a reasonable
investigation. If the permitted payment stablecoin issuer determines
that misuse of its information about a customer has occurred or is
reasonably possible, it would be required to notify the affected
customer and 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. The permitted payment stablecoin issuer would be required to
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. Under Sec. 15.13(b)(7)(ii), if a 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 and the circumstances of the unauthorized
access lead the permitted payment stablecoin issuer to determine that
misuse of the information is reasonably possible, it would be required
to notify all customers in the group.
Section 15.14(h) would require all permitted payment stablecoin
issuers to submit to the OCC, on a weekly basis, in the manner and form
specified by the OCC, a confidential report containing the information
requested in the form that would be available at www.occ.gov.
Section 15.14(i) covers the quarterly reports of financial
condition and its required contents. All permitted payment stablecoin
issuers subject to OCC supervision would be required to submit to the
OCC a quarterly report on the financial condition of the permitted
payment stablecoin issuer, including, but not limited to income
statement, expenses, balance sheet, reserves, changes in equity,
investments, capital, outstanding issuance value, and assets under
custody, in a standardized format as prescribed by the OCC within 30
days of the end of the prior quarter. The forms and instructions would
be available at www.occ.gov. The report of financial condition would be
required to contain a declaration by the permitted payment stablecoin
issuer's Chief Financial Officer, or the individual performing an
equivalent function, that the report is true and correct to the best of
their knowledge and belief. The correctness of the report of financial
condition would be required to be attested by the signatures of the
directors and senior management of the permitted payment stablecoin
issuer other than the officer, or the individual performing an
equivalent function, making such declaration, with the attestation
stating that the report has been examined by them and to the best of
their knowledge and belief is true and correct.
Section 15.14(j) covers the submission of other reports requested
by the OCC. Upon request, all permitted payment stablecoin issuers,
would be required to submit to the OCC 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 operational risks, compliance of the permitted payment
stablecoin issuer and any subsidiary thereof with the GENIUS Act, and
12 CFR part 15, and compliance of the permitted payment stablecoin
issuer with the requirements of the Bank Secrecy Act and with laws
authorizing the imposition of sanctions and implemented by the
Secretary of the Treasury.
Section 15.14(k) sets forth ongoing compliance reporting. No later
than 180 days after the approval of an application, as defined in Sec.
15.30, and on an annual basis thereafter, a permitted payment
stablecoin issuer subject to OCC supervision, would be required to
submit to the OCC a certification by its board of directors that the
permitted payment stablecoin issuer has implemented anti-money
laundering and economic sanctions compliance programs. The programs
would be required to be reasonably designed to prevent the permitted
payment stablecoin issuer from facilitating money laundering,
specifically, facilitating money laundering for cartels and
organizations designated as foreign terrorist organizations under
section 219 of the Immigration and Nationality Act (8 U.S.C. 1189) and
the financing of terrorist activities, consistent with the requirements
of the GENIUS Act.
Section 15.14(l)(2) sets forth the requirements for preparing and
submitting an audited annual financial statement. Section
15.14(l)(2)(ii) would require a permitted payment stablecoin issuer to
submit the audited financial statements annually, within 120 days after
the end of its fiscal year, to the OCC.
Section 15.14(l)(2)(iii) provides that if a permitted payment
stablecoin issuer is unable to timely file all or any portion of the
audited annual financial statement that would be required under Sec.
15.14(l)(2)(ii), it must submit a written notice of late filing to the
OCC. The notice would be required to disclose the permitted payment
stablecoin issuer's inability to timely file all, or specified
portions, of its annual financial statement and the reasons therefore
in reasonable detail, include the date by which the financial statement
will be filed, and be filed on or before the deadline for filing the
financial statement.
Section 15.14(m) sets forth notice requirements for changes in
control of the permitted payment stablecoin issuer. Under this section,
a person seeking to acquire control of a permitted payment stablecoin
issuer would be required to follow the requirements of 12 CFR 5.50 as
if the permitted payment stablecoin issuer were a national bank.
Section 15.15(b)(2) sets forth initial notice requirements for
State qualified payment stablecoin issuers that are nonbank entities
with an outstanding issuance value of more than $10 billion. Under the
section, a State qualified payment stablecoin issuer that is a nonbank
entity with an outstanding issuance value of more than $10 billion
would be required to provide written notification to the OCC within
five calendar days after reaching such threshold. The written
notification would be required to include: the State or States that
currently regulate the State qualified payment stablecoin issuer, the
State qualified payment stablecoin issuer's outstanding issuance
[[Page 10270]]
value as of the date of the notice, the date that the State qualified
payment stablecoin issuer first reached the $10 billion outstanding
issuance value threshold, and an indication of whether and when the
State qualified payment stablecoin issuer ceased issuing, on a net
basis, new payment stablecoins and whether the State qualified payment
stablecoin issuer intends to seek a waiver pursuant to Sec. 15.15(d).
Section 15.15(b)(3) sets forth the capital analysis requirements
for State qualified payment stablecoin issuers that are nonbank
entities. Under the section, within 270 days of reaching the $10
billion outstanding issuance value threshold, a State qualified payment
stablecoin issuer that is a nonbank entity would be required to submit
a capital analysis to the OCC. The analysis would be required to
include an analysis of the issuer's current capital position and
anticipated capital needs, sufficient to ensure ongoing operations,
based on its business model and risk profile. A State qualified payment
stablecoin issuer that is a nonbank entity would not be required to
submit a capital plan if the issuer has received a waiver pursuant to
Sec. 15.15(d) or is not required to transition to the federal
regulatory framework pursuant to Sec. 15.15(b)(1)(ii).
Section 15.15(b)(4) sets forth compliance notice requirements for a
State qualified payment stablecoin issuer that is a nonbank entity.
Under Sec. 15.15(b)(4)(i), for purposes of complying with Sec.
15.15(b)(1)(i), a State qualified payment stablecoin issuer that is a
nonbank entity would be required to provide written notification to the
OCC, that it complies, with the Federal regulatory framework under 12
CFR part 15. If the State qualified payment stablecoin issuer is not in
compliance with the Federal regulatory framework under 12 CFR part 15,
the written notice would need to identify the provisions with which the
issuer does not comply, provide the issuer's plan for remediating its
noncompliance, and explain why the issuer did not comply with the
Federal regulatory framework within the 360-day transition period.
Section 15.15(d)(1) would require a State qualified payment
stablecoin issuer that is a nonbank entity seeking to remain solely
supervised by a State payment stablecoin regulator to submit to the OCC
a written waiver request containing information necessary to evaluate
such request under Sec. 15.15(d)(2) and (3). In addition, a State
qualified payment stablecoin issuer that is a nonbank entity seeking to
remain solely supervised by a State payment stablecoin issuer would be
required to submit a waiver request within 240 days of reaching the $10
billion outstanding issuance value.
Section 15.30(a)(1) sets forth application requirements for insured
national banks, Federal savings associations, and insured Federal
branches. This section provides that any insured national bank, Federal
savings association, or insured Federal branch that seeks to issue
payment stablecoins through a subsidiary would be required to file an
application under this section and receive prior approval from the OCC
before issuing payment stablecoins.
Section 15.30(a)(2) sets forth application requirements for nonbank
entities, uninsured national banks, and uninsured Federal branches.
This section provides that any nonbank entity, uninsured national bank,
or uninsured Federal branch that seeks to issue payment stablecoins as
a Federal qualified payment stablecoin issuer would be required to file
an application under this section and receive prior approval from the
OCC before issuing payment stablecoins.
Section 15.30(b) sets forth the application process for insured
national banks, Federal savings associations, insured Federal branches
and nonbank entities, uninsured national banks, and uninsured Federal
branches that seek to issue payment stablecoins. The process would
require an applicant to submit all the information required by the form
for an application under this section. The forms and instruction would
be available on the OCC's website. Each director, executive officer,
and principal shareholder of the applicant (or in the case of an
applicant that is an insured national bank, Federal savings association
or Federal branch, of the subsidiary of the applicant) would be
required to submit the information prescribed in the Interagency
Biographical and Financial Report, available at the OCC's website. An
applicant would be required to certify that any filing or supporting
material submitted to the OCC contains no material misrepresentations
or omissions. The process provides that an applicant should address an
application under this section to the appropriate OCC licensing office,
unless the OCC advises an applicant otherwise. The OCC will consider an
application substantially complete if it contains sufficient
information for the OCC to render a decision on whether the applicant
satisfies the factors set forth in Sec. 15.30(c). The OCC will notify
applicants not later than 30 days after receipt of an application
whether the application is substantially complete. If the application
is not substantially complete, the OCC will notify the applicant of the
information required in order for the application to be substantially
complete.
Section 15.30(e)(1) provides that an applicant's request for a
written or oral hearing to appeal the OCC's denial of a substantially
complete application would be required to be in writing.
Section 15.30(f)(1) provides that an insured national bank, Federal
savings association, or insured Federal branch that has a pending
substantially complete application for a subsidiary to become a
permitted payment stablecoin issuer on or before the effective date of
the GENIUS Act may request that the OCC waive the requirements of
section 4 of the GENIUS Act (12 U.S.C. 5903) with respect to that
subsidiary. The requests would be required to be in writing.
Section 15.30(f)(2) provides that a nonbank entity, uninsured
national bank, or uninsured Federal branch that has a pending
substantially complete application to become a Federal qualified
payment stablecoin issuer on or before the effective date of the GENIUS
Act may request that the OCC waive the requirements of section 4 of the
GENIUS Act (12 U.S.C. 5903) with respect to that entity. The requests
would be required to be in writing.
Section 15.31(b)(2) sets forth reporting requirements for foreign
payment stablecoin issuers registered with the OCC. Section
15.31(b)(2)(i) provides that a foreign payment stablecoin issuer
registered with the OCC pursuant to Sec. 15.32 would be required to
produce the reports required of a permitted payment stablecoin issuer
under Sec. 15.14 as well as any other reports the OCC may require.
Section 15.31(b)(2)(ii) further provides that a foreign payment
stablecoin issuer may request, in writing, an exemption from any
reporting requirement that would otherwise apply under proposed Sec.
15.14. The OCC may grant an exemption in its sole discretion.
Section 15.31(c) sets forth prohibitions on interest that would
apply to foreign payment stablecoin issuers registered with the OCC
pursuant to Sec. 15.32. Under Sec. 15.31(c)(4) a foreign payment
stablecoin issuer may rebut the presumption described in Sec.
15.31(c)(2), by submitting written materials that demonstrate that the
contract, agreement, or other arrangement is not prohibited under Sec.
15.31(c) and is not an attempt to evade the prohibition.
Section 15.32(a) sets forth application requirements for a foreign
payment stablecoin issuer. This section provides
[[Page 10271]]
that a foreign payment stablecoin issuer that seeks to be registered
with the OCC under section 18(c) of the GENIUS Act (12 U.S.C. 5916(c))
would be required to file an application under this section.
Section 15.32(b) sets forth the application process for a foreign
payment stablecoin issuer that seeks to be registered with the OCC
under section 18(c) of the GENIUS Act (12 U.S.C. 5916(c)). The process
would require an applicant to provide the information that includes all
the information required by the form for an application under this
section, evidence that the Secretary of the Treasury has determined
that the applicant is subject to regulatory and supervisory regime
comparable to the GENIUS Act with respect to payment stablecoins, under
section 18 of the GENIUS Act (12 U.S.C. 5916), a certification that the
applicant will make available to the OCC all information that the OCC
deems necessary to determine and enforce compliance with the GENIUS
Act, the applicant's consent to United States jurisdiction relating to
enforcement of the GENIUS Act and regulations established thereunder,
and certification that any filing or supporting material submitted to
the OCC contains no material misrepresentations or omissions. The
process provides that an applicant should address an application under
this section to the appropriate OCC licensing office, unless the OCC
advises an applicant otherwise. The forms and instruction would be
available on the OCC's website.
Section 15.32(d)(3)(i) would require foreign payment stablecoin
issuers provide evidence that it holds reserves in the United States
that are sufficient to meet the liquidity demands of United States
customers on an ongoing basis, unless otherwise permitted under a
reciprocal arrangement implemented by the Secretary of the Treasury
under section 18(d) of the GENIUS Act (12 U.S.C. 5916(d)).
Additionally, Sec. 15.32(d)(3)(ii) would require foreign payment
stablecoin issuers provide to the OCC, on a monthly basis, a report
describing the total number of outstanding payment stablecoins issued
by the foreign payment stablecoin issuer held by United States
customers and the amount and composition of the foreign payment
stablecoin issuer's reserves, including their geographic location and
average tenor of reserve instruments, using a format substantially
similar to the template provided in Table 1 to Sec. 15.32(d)(3).
Section 15.32(f) provides that a foreign payment stablecoin
issuer's request for a written or oral hearing to appeal the OCC's
rejection of an application for registration would be required to be in
writing.
Section 15.40 sets forth capital elements and would require the
minimum capital requirement to consist of common equity tier 1 capital
and additional tier 1 capital. Among other criteria, Sec.
15.40(b)(1)(iii) would provide that common equity tier 1 capital must
be a common stock instrument issued by the payment stablecoin issuer
that has no maturity date, can only be redeemed via discretionary
repurchases with the prior approval of the OCC, and does not contain
any term or feature that creates an incentive to redeem.
Section 15.40(c) sets forth additional tier 1 capital elements,
that include instruments that meet specific criteria. Section
15.40(c)(1)(v)(A) would require a permitted stablecoin issuer receive
prior approval from the OCC to exercise a call option on the
instrument. Additionally, Sec. 15.40(c)(1)(vi) would also require
prior approval from the OCC for the redemption or repurchase of the
instrument.
Section 15.41 sets forth minimum capital and backstop requirements
for permitted payment stablecoin issuers. Section 15.41(d)(2) would
require an uninsured national trust bank to submit a notice to the
appropriate OCC supervisory office to make an election, or rescind a
prior election described in this section.
Section 15.42 sets forth individual additional capital or backstop
requirements for individual permitted payment stablecoin issuers.
Section 15.42(c)(2)(i) provides that a permitted payment stablecoin
issuer would be able to respond to any or all of the items in the
notice sent by the OCC notifying the permitted payment stablecoin
issuer in writing of the proposed additional capital or backstop
requirement and the date by which it should be reached (if applicable).
The response would be required to be in writing and delivered to the
designated OCC official within 30 days after the date on which the
permitted payment stablecoin issuer received the notice or such other
time period as the OCC determines appropriate based on the condition of
the permitted payment stablecoin issuer.
Section 15.42(c)(3) sets forth the OCC's decision process in
determining whether the individual additional capital or backstop
requirement should be established for a permitted payment stablecoin
issuer and, if so, the requirement and the date the requirement will
become effective. Section 15.42(c)(4) provides that the OCC's decision
may require the permitted payment stablecoin issuer to develop and
submit to the OCC, within a time period specified, an acceptable plan
to reach the additional capital or backstop requirement established for
the permitted payment stablecoin issuer by the date required.
Recordkeeping Requirements
Section 15.11(a)(1) would require a permitted payment stablecoin
issuer to maintain reserve assets that are identifiable, are segregated
from and not commingled with other assets owned or held by the
permitted payment stablecoin issuer, at all times have a total fair
value that equals or exceeds the outstanding issuance value of the
permitted payment stablecoin issuer, and are either held directly by
the permitted payment stablecoin issuer or within the custody of an
eligible financial institution.
Section 15.11(f)(1) would require a permitted payment stablecoin
issuer to, each month, have the information disclosed in the previous
month-end report required under Sec. 15.11(e) examined by a registered
public accounting firm. Section 15.11(f)(2) would require each month,
the Chief Executive Officer and Chief Financial Officer (or the persons
performing the equivalent functions) of a permitted payment stablecoin
issuer submit a certification as to the accuracy of the monthly report
required under Sec. 15.11(e) to the OCC.
Section 15.12(b) would require a permitted payment stablecoin
issuer's redemption policy establish clear and conspicuous procedures
for timely redemption of outstanding payment stablecoins. Timely
redemption may not exceed two business days following the date of the
requested redemption and 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, Board, or the State
payment stablecoin regulator, as applicable.
Section 15.13(a)(1) covers internal controls and information
systems. A permitted payment stablecoin issuer, would be required to
have internal controls and information systems to support effective
risk management, that are appropriate to the size and complexity of the
permitted payment stablecoin issuer and the nature, scope, and risk of
its activities. The internal controls are required to provide for: 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;
effective risk assessment; timely and accurate
[[Page 10272]]
financial, operational, and regulatory reports, including with respect
to the reports required under 12 CFR part 15; adequate procedures to
monitor, safeguard, manage, control, and monetize assets, including
reserve assets; and compliance with applicable laws and regulations.
Section 15.13(a)(2) covers internal audit systems. A permitted
payment stablecoin issuer would be required to 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. The internal audit system would be required to provide for
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. Additionally, the internal audit system would also
be required to provide: a system of independent reviews of key internal
controls; independence and objectivity; qualified persons responsible
for the audit function; and 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. The internal audit system would also require
adequate documentation of tests and findings and any corrective
actions, verification and review of management actions to address
deficiencies, and review by the permitted payment stablecoin issuer's
audit committee or board of directors of the effectiveness of the
internal audit systems.
Section 15.13(a)(5) would require a permitted payment stablecoin
issuer to establish and maintain a 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 required by subpart E of 12 CFR part 15.
Section 15.13(a)(6)(i)(C) would require that a permitted payment
stablecoin issuer ensure that transactions between the permitted
payment stablecoin issuer and insiders or affiliates are appropriately
documented and reviewed by the board of directors.
Section 15.13(b) covers information technology and security
programs. Section 15.13(b)(1) would require a permitted payment
stablecoin issuer to implement a comprehensive written information
security risk and control framework, including a program that assesses
and manages information technology and information security risks.
Section 15.13(b)(2) would require the board of directors or an
appropriate board committee to approve the information technology and
security program and oversee the development, implementation, and
maintenance of the program, including the appointment of a qualified
Information Technology and Security Officer. Such oversight includes
assigning specific responsibility for program implementation and review
of program-related reports. Section 15.13(b)(3) would require a
permitted payment stablecoin issuer's information technology and
security program include: an inventory and classification of assets,
processes, and sensitivity of data; controls supporting and
safeguarding sensitive information and processes; evaluation,
validation, and reporting processes to ensure that key information
technology systems and controls, including smart contracts are
operating as intended; periodic independent testing; and a
comprehensive and effective incident identification and assessment
process and incident response program. Section 15.13(b)(4) requires a
permitted payment stablecoin issuer's information technology and
security program include administrative, technical, and physical
safeguards designed to ensure the security and confidentiality of
records containing nonpublic personal information about a customer. The
program would also be required to protect against any anticipated
threats or hazards to the security or integrity of such records,
protect against unauthorized access to or use of such records that
could result in substantial harm or inconvenience to any customer, and
ensure the proper disposal of such records. Section 15.13(b)(6)
provides that a permitted payment stablecoin issuer would be required
to 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. Finally, Sec. 15.13(b)(8) would
require a permitted payment stablecoin issuer's information technology
and security program include measures to ensure continuity of
operations and recovery of critical functions in the face of
disruptions, including by business impact analyses, testing of
vulnerabilities, and testing with critical service providers.
Section 15.13(b)(5) would require a permitted payment stablecoin
issuer to 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.\132\
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\132\ 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, permitted payment
stablecoin issuers holding digital assets on a customer's behalf
would be required to maintain risk management practices, and
information security practices in particular, that reflect a
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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Section 15.14(f) would require all permitted payment stablecoin
issuers to maintain a complete set of books and records in English.
Section 15.14(g) would require all permitted payment stablecoin
issuers to develop and implement a records retention policy that is
sufficient to ensure the permitted payment stablecoin issuer can
demonstrate compliance with the GENIUS Act, 12 CFR part 15, and all
applicable laws and regulations.
Section 15.14(l) would require that a permitted payment stablecoin
issuer with more than $50 billion in outstanding issuance value, that
is not subject to certain reporting requirements under the Securities
and Exchange Act of 1934, prepare in accordance with GAAP, an annual
financial statement. Section 15.14(l)(1) would require additionally,
that a registered public accounting firm perform an audit of the
financial statements and sets forth the auditing requirements.
Section 15.15(b) covers the requirements related to a State
qualified payment stablecoin issuer that is a nonbank entity
transitioning to the OCC's regulatory framework pursuant to section 4
of the GENIUS Act (12 U.S.C. 5903). Section 15.15(b)(1)(i) and (ii),
would require a State qualified payment stablecoin issuer that is a
nonbank entity of a payment stablecoin with an outstanding issuance
value of more than $10 billion to no later than 360 days
[[Page 10273]]
after reaching such threshold, transition to the Federal regulatory
framework under 12 CFR part 15 and comply with the provisions of this
part applicable to Federal qualified payment stablecoin issuers or
cease issuing, on a net basis, new payment stablecoins until the issuer
is under the $10 billion outstanding issuance value threshold.
Additionally, Sec. 15.15(b)(4)(ii) provides that a State qualified
payment stablecoin issuer that does not cease issuing new payment
stablecoins in accordance with Sec. 15.15(b)(1)(ii) would be required
to transition to the regulatory framework under this part on the
earlier of 360 days after reaching the $10 billion outstanding issuance
value threshold or the date on which the State qualified payment
stablecoin issuer provides written notification under Sec.
15.15(b)(4)(i).
Section 15.21 sets forth covered asset custodial property
requirements. Section 15.21(b)(1) provides that a covered custodian
would be required to take appropriate steps to protect the covered
assets of covered customers from the claims of creditors of the covered
custodian and any sub-custodian, as applicable, through adopting,
implementing, and maintaining written policies, procedures, and
internal controls that are adequate to comply with applicable law and
that are commensurate with the covered custodian's size, complexity,
and risk profile and with the nature of the applicable covered assets
for which it provides custodial services.
Disclosure Requirements
Section 15.11(e) sets forth the specific disclosure requirements
for composition reports. A permitted payment stablecoin issuer by noon
on the fifth day of a calendar month, would be required to publish the
monthly composition of the issuer's reserves held pursuant to the
GENIUS Act (12 U.S.C. 5901 et seq.) as of noon on the last day of the
previous month on the website of the issuer, using a format like the
template provided in Table 1 of Sec. 15.11(e). The template should
disclose the total number of outstanding payment stablecoins issued by
the issuer and the amount and composition of the reserves described in
Sec. 15.11(a), including the average tenor and geographic location of
custody of each category of reserve instruments.
Section 15.12(a) provides that a permitted payment stablecoin
issuer would be required to publicly disclose its redemption policy and
include: the timeframe in which the issuer will redeem payment
stablecoins and the timeframe under which the issuer is required to
redeem payment stablecoins under Sec. 15.12(b)(1)(i); a statement
explaining the limitation in Sec. 15.12(b)(1)(ii); a statement
explaining the scenarios under which the redemption period may be
extended as described in Sec. 15.12(c); 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; and 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.
Section 15.12(d) sets forth purchase and redemption disclosures and
fee requirements. Section 15.12(d)(1) would require a permitted payment
stablecoin issuer publicly, clearly, and conspicuously disclose in
plain language and in a format that is readily noticeable to customers,
readily understandable by customers, and segregated from other
information: the name of the permitted payment stablecoin issuer that
issues the payment stablecoin; 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;
the link to the monthly composition report of the relevant permitted
payment stablecoin issuer's reserves required under Sec. 15.11(e); and
all fees associated with purchasing or redeeming payment stablecoins.
Additionally, Sec. 15.12(d)(2) would require that: the permitted
payment stablecoin issuer update the disclosures in Sec.
15.12(d)(1)(iv) if there are any changes in fees associated with
purchasing or deeming payment stablecoins and provide customers at
least seven calendar days' prior notice of the change, including by
securely delivering the notice to current customers. Section
15.12(d)(3) also would require a permitted payment stablecoin issuer to
publish the disclosures in Sec. 15.12(d)(1) and any updates made in
accordance with Sec. 15.12(d)(2) on the permitted payment stablecoin
issuer's website. Section 15.12(d)(4) also would require the permitted
payment stablecoin issuer include the disclosures in Sec. 15.12(d)(1)
and any updates made in accordance with Sec. 15.12(d)(2) in any
customer agreements that it provides.
Section 15.14(1) would require the audited annual financial
statement include the disclosure of any related party transactions, as
defined by GAAP.
Section 15.14(l)(2)(i) would require a permitted payment stablecoin
issuer to make the audited financial statements publicly available on
the permitted payment stablecoin issuer's website.
Section 15.32(d) sets forth the conditions of approval for foreign
payment stablecoin issuers seeking to be registered with the OCC under
section 18(c) of the GENIUS ACT (12 U.S.C. 5916(c)). Section
15.32(d)(1) and (2) provides that upon request by the OCC, foreign
payment stablecoin issuers would be required to grant the OCC prompt
and complete access to all officers, directors, employees, and agents
and to all relevant books, records, or documents of any type, in a form
and location accessible to the OCC in the United States. The foreign
payment stablecoin issuer would also be required to make all
information available to the OCC in English.
Estimated Burden
Frequency: Weekly, monthly, quarterly, annually, event-generated,
and on occasion.
Respondents: National banks, Federal savings associations, Federal
qualified payment stablecoin issuers, State qualified payment
stablecoin issuers, foreign issuers.
Summary of Total Estimated Annual Burden:
---------------------------------------------------------------------------
\133\ Covered under OMB control number 1557-0014.
\134\ Covered under OMB control number 1557-0014.
----------------------------------------------------------------------------------------------------------------
Estimated Estimated Estimated Estimated
number of frequency of average hours annual burden
respondents response per response hours
----------------------------------------------------------------------------------------------------------------
Initial Set-up Reporting Burden:
Section 15.10(c)(4)(iii)................... 29 1 0.5 14.5
Section 15.10(c)(5)(iii)(B)................ 29 1 4 116
Section 15.11(a)(2)........................ 29 1 4 116
[[Page 10274]]
Section 15.11(g)(1)........................ 29 1 1 29
Section 15.11(g)(4)........................ 29 1 4 116
Section 15.12(c)(4)........................ 29 1 0.5 14.5
Section 15.13(a)(3)........................ 29 1 160 4,640
Section 15.13(b)(7)(i)..................... 29 1 4 116
Section 15.13(b)(7)(ii).................... 29 1 4 116
Section 15.14(h)........................... 29 1 16 464
Section 15.14(i)........................... 29 1 80 2,320
Section 15.14(j)........................... 29 1 16 464
Section 15.14(k)........................... 29 1 80 2,320
Section 15.14(l)(2)(ii).................... 1 1 480 480
Section 15.14(l)(2)(iii)................... 1 1 8 8
Section 15.14(m)........................... 29 1 2 58
Section 15.15(b)(2)........................ 1 1 4 4
Section 15.15(b)(3)........................ 1 1 40 40
Section 15.15(b)(4)........................ 1 1 8 8
Section 15.15(d)(1)........................ 1 1 8 8
Section 15.30(a)(1)........................ 12 1 1 12
Section 15.30(a)(2)........................ 17 1 1 17
Section 15.30(b) \133\..................... .............. .............. ............... ..............
Section 15.30(e)(1)........................ 17 1 40 680
Section 15.30(f)(1)........................ 12 1 1 12
Section 15.30(f)(2)........................ 17 1 1 17
Section 15.31(b)(2)........................ 1 1 80 80
Section 15.31(c)(4)........................ 1 1 8 8
Section 15.32(a)........................... 1 1 1 1
Section 15.32(b)........................... 1 1 80 80
Section 15.32(d)(3) Table 1................ 1 1 1 1
Section 15.32(d)(3)(i)..................... 1 1 40 40
Section 15.32(d)(3)(ii).................... 1 1 120 120
Section 15.32(f)........................... 1 1 8 8
Section 15.40(b)(1)(iii)................... 29 1 1 29
Section 15.40(c)(1)(v)(A).................. 29 1 1 29
Section 15.40(c)(1)(vi).................... 29 1 1 29
Section 15.41(d)(2)........................ 1 1 2 2
Section 15.42(c)(2)(i)..................... 29 1 40 1,160
Section 15.42(c)(4)........................ 29 1 40 1,160
----------------------------------------------------------------
Total Reporting Burden................. .............. .............. ............... 14,937
Recordkeeping Burden:
Section 15.11(a)(1)........................ 29 1 40 1,160
Section 15.11(f)(1)........................ 29 1 8 232
Section 15.11(f)(2)........................ 29 1 8 232
Section 15.12(b)........................... 29 1 8 232
Section 15.13(a)(1)........................ 29 1 80 2,320
Section 15.13(a)(2)........................ 29 1 80 2,320
Section 15.13(a)(5)........................ 29 1 80 2,320
Section 15.13(a)(6)(i)(C).................. 29 1 8 232
Section 15.13(b)(1), (2), (3), (4), (6), 29 1 160 4,640
and (8)...................................
Section 15.13(b)(5)........................ 29 1 80 2,320
Section 15.14(f)........................... 29 1 40 1,160
Section 15.14(g)........................... 29 1 40 1,160
Section 15.14(l)........................... 1 1 160 160
Section 15.14(l)(1)........................ 1 1 1 1
Section 15.15(b)(1)(i) and (ii)............ 1 1 160 160
Section 15.15(b)(4)(ii).................... 1 1 1 1
Section 15.21(b)(1)........................ 21 1 8 168
----------------------------------------------------------------
Total Recordkeeping Burden............. .............. .............. ............... 18,818
Disclosure Burden:
Section 15.11(e)........................... 29 1 40 1,160
Section 15.11(e) Table 1................... 29 1 1 29
Section 15.12(a)........................... 29 1 8 232
Section 15.12(d)........................... 29 1 8 232
Section 15.14(l)........................... 29 1 4 4
Section 15.14(l)(2)(i)..................... 1 1 16 16
Section 15.32(d)(1) and (2)................ 1 1 40 40
----------------------------------------------------------------
Total Disclosure Burden................ .............. .............. ............... 1,713
Total Initial Set-Up................... .............. .............. ............... 35,468
----------------------------------------------------------------------------------------------------------------
[[Page 10275]]
----------------------------------------------------------------------------------------------------------------
Estimated Estimated Estimated Estimated
number of frequency of average hours annual burden
respondents response per response hours
----------------------------------------------------------------------------------------------------------------
Ongoing Compliance Reporting Burden:
Section 15.10(c)(4)(iii)................... 29 1 1 29
Section 15.10(c)(5)(iii)(B)................ 29 1 1 29
Section 15.11(a)(2)........................ 29 1 16 464
Section 15.11(g)(1)........................ 29 1 1 29
Section 15.11(g)(4)........................ 29 1 8 232
Section 15.12(c)(4)........................ 29 1 0.5 14.5
Section 15.13(a)(3)........................ 29 12 40 13,920
Section 15.13(b)(7)(i)..................... 29 1 1 29
Section 15.13(b)(7)(ii).................... 29 1 1 29
Section 15.14(h)........................... 29 52 1 1,508
Section 15.14(i)........................... 29 4 16 1,856
Section 15.14(j)........................... 29 1 40 1,160
Section 15.14(k)........................... 29 1 8 232
Section 15.14(l)(2)(ii).................... 1 1 40 40
Section 15.14(l)(2)(iii)................... 1 1 16 16
Section 15.14(m)........................... 29 1 2 58
Section 15.15(b)(2)........................ 1 1 1 1
Section 15.15(b)(3)........................ 1 1 1 1
Section 15.15(b)(4)........................ 1 1 1 1
Section 15.15(d)(1)........................ 1 1 1 1
Section 15.30(a)(1)........................ 12 1 1 12
Section 15.30(a)(2)........................ 17 1 1 17
Section 15.30(b) \134\..................... .............. .............. ............... ..............
Section 15.30(e)(1)........................ 17 1 1 17
Section 15.30(f)(1)........................ 12 1 1 12
Section 15.30(f)(2)........................ 17 1 1 17
Section 15.31(b)(2)........................ 1 1 80 80
Section 15.31(c)(4)........................ 1 1 8 8
Section 15.32(a)........................... 1 1 1 1
Section 15.32(b)........................... 1 1 1 1
Section 15.32(d)(3) Table 1................ 1 1 1 1
Section 15.32(d)(3)(i)..................... 1 1 40 40
Section 15.32(d)(3)(ii).................... 1 12 16 192
Section 15.32(f)........................... 1 1 1 1
Section 15.40(b)(1)(iii)................... 29 1 1 29
Section 15.40(c)(1)(v)(A).................. 29 1 1 29
Section 15.40(c)(1)(vi).................... 29 1 1 29
Section 15.41(d)(2)........................ 1 1 1 1
Section 15.42(c)(2)(i)..................... 29 1 1 29
Section 15.42(c)(4)........................ 29 1 1 29
----------------------------------------------------------------
Total Reporting Burden................. .............. .............. ............... 20,194.50
Recordkeeping Burden:
Section 15.11(a)(1)........................ 29 12 4 1,392
Section 15.11(f)(1)........................ 29 12 2 696
Section 15.11(f)(2)........................ 29 12 0.25 87
Section 15.12(b)........................... 29 1 1 29
Section 15.13(a)(1)........................ 29 1 1 29
Section 15.13(a)(2)........................ 29 1 1 29
Section 15.13(a)(5)........................ 29 1 1 29
Section 15.13(a)(6)(i)(C).................. 29 1 1 29
Section 15.13(b)(1), (2), (3), (4), (6), 29 1 1 29
and (8)...................................
Section 15.13(b)(5)........................ 29 1 1 29
Section 15.14(f)........................... 29 1 8 232
Section 15.14(g)........................... 29 1 1 29
Section 15.14(l)........................... 1 1 1 1
Section 15.14(l)(1)........................ 1 1 1 1
Section 15.15(b)(1)(i) and (ii)............ 1 1 1 1
Section 15.15(b)(4)(ii).................... 21 1 1 21
Section 15.21(b)(1)........................ .............. .............. ............... ..............
----------------------------------------------------------------
Total Recordkeeping Burden............. .............. .............. ............... 2,664
Disclosure Burden:
Section 15.11(e)........................... 29 12 8 2,784
Section 15.11(e) Table 1................... 29 12 1 348
Section 15.12(a)........................... 29 1 1 29
Section 15.12(d)........................... 29 1 1 29
Section 15.14(l)........................... 1 1 8 8
Section 15.14(l)(2)(i)..................... 1 1 8 8
Section 15.32(d)(1) and (2)................ 1 1 40 40
----------------------------------------------------------------
[[Page 10276]]
Total Disclosure Burden................ .............. .............. ............... 3,246
Total Ongoing Compliance............... .............. .............. ............... 26,104.50
----------------------------------------------------------------
Grand Total........................ .............. .............. ............... 61,572.50
----------------------------------------------------------------------------------------------------------------
Total estimated annual burden hours: 61,573 (rounded) (35,468 hours
for initial setup and 26,105 (rounded) hours for ongoing compliance).
Comments on aspects of this document that may affect reporting,
recordkeeping, or disclosure requirements and burden estimates should
be submitted as provided in the ADDRESSES section of the SUPPLEMENTARY
INFORMATION and are invited on:
(a) Whether the collection of information is necessary for the
proper performance of the functions of the OCC, including whether the
information has practical utility;
(b) The accuracy of the OCC's estimate of the burden of the
collection of information;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the collection on respondents,
including through the use of automated collection techniques or other
forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA),\135\ requires an agency to
consider the impact of its proposed rules on small entities (defined by
the U.S. Small Business Administration (SBA) for purposes of the RFA to
include commercial banks and savings institutions with total assets of
$850 million or less and trust companies with total assets of $47
million or less). In connection with a proposed rule, the RFA generally
requires an agency to prepare an Initial Regulatory Flexibility
Analysis (IRFA) describing the impact of the rule on small entities,
unless the head of the agency certifies that the proposed rule will not
have a significant economic impact on a substantial number of small
entities and publishes such certification along with a statement
providing the factual basis for such certification in the Federal
Register. An IRFA must contain: (1) a description of the reasons why
action by the agency is being considered; (2) a succinct statement of
the objectives of, and legal basis for, the proposed rule; (3) a
description of and, where feasible, an estimate of the number of small
entities to which the proposed rule will apply; (4) a description of
the projected reporting, recordkeeping, and other compliance
requirements of the proposed rule, including an estimate of the classes
of small entities that will be subject to the requirements and the type
of professional skills necessary for preparation of the report or
record; (5) an identification, to the extent practicable, of all
relevant Federal rules that may duplicate, overlap with, or conflict
with the proposed rule; and (6) a description of any significant
alternatives to the proposed rule that accomplish its stated
objectives.
---------------------------------------------------------------------------
\135\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
The OCC currently supervises 997 institutions (national banks,
Federal savings associations, and branches or agencies of foreign
banks),\136\ of which approximately 609 are small entities under the
RFA.\137\
---------------------------------------------------------------------------
\136\ Based on data accessed using the OCC's Financial
Institutions Data Retrieval System on February 20, 2026.
\137\ The OCC bases its estimate of the number of small entities
on the Small Business Administration's size thresholds for
commercial banks and savings institutions, and trust companies,
which are $850 million and $47 million, respectively. Consistent
with the General Principles of Affiliation, 13 CFR 121.103(a), the
OCC counted the assets of affiliated financial institutions when
determining if it should classify an OCC-supervised institution as a
small entity. The OCC used average quarterly assets in 2024 to
determine size because a ``financial institution's assets are
determined by averaging the assets reported on its four quarterly
financial statements for the preceding year.'' See footnote 8 of the
U.S. Small Business Administration's Table of Size Standards.
---------------------------------------------------------------------------
In general, the OCC classifies the economic impact on an individual
small entity as significant if the total estimated impact in one year
is greater than 5 percent of the small entity's total annual salaries
and benefits or greater than 2.5 percent of the small entity's total
non-interest expense. Furthermore, the OCC considers 5 percent or more
of OCC-supervised small entities to be a substantial number, and at
present, 30 OCC-supervised small entities would constitute a
substantial number.
Given that all current OCC banks that issue stablecoins generally
have issuance of over $1 billion and are not considered small entities
and the lack of small entity stablecoin issuers, the OCC will need to
wait for more information to determine whether it is likely that there
will be a significant number of small entities affected by the proposed
rule. At this time, the OCC does not expect that the proposed rule
would have a significant impact on a substantial number of small
entities under the RFA.
OCC Unfunded Mandates Reform Act
The OCC has analyzed the proposed rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA).\138\ Under this analysis,
the OCC considered whether the proposed rule includes a Federal mandate
that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year ($187 million as adjusted annually for
inflation).
---------------------------------------------------------------------------
\138\ 2 U.S.C. 1531 et seq.
---------------------------------------------------------------------------
The OCC has determined that the proposed rule may result in an
expenditure of $187 million or more annually by the private sector. The
OCC has prepared an impact analysis and identified and considered
alternative approaches. When the proposed rule is published in the
Federal Register, the full text of the OCC's analysis will be available
at: https://www.regulations.gov, Docket ID OCC-2025-0372.
Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994, 12 U.S.C. 4802(a), in determining
the effective date and administrative compliance requirements for new
regulations that impose additional reporting, disclosure, or other
requirements on insured depository institutions, the agencies will
consider, consistent with principles of safety and soundness and the
public interest: (1) any administrative burdens that the proposed rule
would place on
[[Page 10277]]
depository institutions, including small depository institutions and
customers of depository institutions; and (2) the benefits of the
proposed rule. The OCC requests comment on any administrative burdens
that the proposed rule would place on depository institutions,
including small depository institutions, and their customers, and the
benefits of the proposed rule that the agencies should consider in
determining the effective date and administrative compliance
requirements for a final rule.
Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023, 5
U.S.C. 553(b)(4), requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website www.regulations.gov.
The OCC is proposing to issue regulations to implement the GENIUS
Act regarding the issuance of payment stablecoins and certain related
activities by entities subject to the OCC's jurisdiction. The proposal
and the required summary can be found at https://www.regulations.gov by
searching for Docket ID OCC-2025-0372 and https://occ.gov/topics/laws-and-regulations/occ-regulations/proposed-issuances/index-proposed-issuances.html.
Executive Order 12866 (as Amended)
Executive Order 12866, titled ``Regulatory Planning and Review,''
as amended, requires the Office of Information and Regulatory Affairs
(OIRA), Office of Management and Budget to determine whether a proposed
rule is a ``significant regulatory action'' prior to the disclosure of
the proposed rule to the public. If OIRA finds the proposed rule to be
a ``significant regulatory action,'' Executive Order 12866 requires the
OCC to conduct a cost-benefit analysis of the proposed rule and for
OIRA to conduct a review of the proposed rule prior to publication in
the Federal Register. Executive Order 12866 defines ``significant
regulatory action'' to mean a regulatory action that is likely to (1)
have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866.
OIRA has determined that this proposed rule is an economically
significant regulatory action under Section 3(f)(1) of Executive Order
12866 and, therefore, is subject to review under Executive Order 12866.
The OCC's analysis conducted in connection with Executive Order
12866 is set forth below.
Baselines
Prior to passage of the GENIUS Act and drafting of the proposed
rule, there was no comprehensive Federal framework governing payment
stablecoin issuance. Rather, payment stablecoin issuance was subject to
State stablecoin laws, State crypto-asset regulations, and/or State
money transmission laws. For non-OCC regulated banks that will be
permitted payment stablecoin issuers, the OCC used the requirements
contained in New York stablecoin laws as the baseline based on the
assumption that non-OCC-regulated banks that issue stablecoins would
have complied with New York State laws and regulations given that at
least a portion of the issuers' stablecoin activity would occur in New
York and therefore generally require the issuer to register in New
York. For OCC-regulated national banks and Federal savings association
affiliated subsidiaries that would be permitted payment stablecoin
issuers, in the absence of the proposed rule, these entities would be
subject to existing laws and regulations that do not specifically
contemplate stablecoins. The OCC confirmed in interpretive letters that
its regulated institutions can issue payment stablecoins and are
allowed to hold deposits that serve as reserves for their stablecoin
issuer customers.\139\ While the interpretive letters recognized that
OCC regulated institutions may provide stablecoin services, the
interpretive letters did not provide a formal federal regulatory
structure governing OCC regulated banks' stablecoin issuance.
Therefore, the baseline would be treatment under existing applicable
Federal law and regulations that did not specifically contemplate
stablecoins. Stablecoin issuance and stablecoin reserve assets would
generally have been treated as standard balance sheet assets and
liabilities, and so the OCC estimated costs for OCC-regulated bank
affiliated permitted payment stablecoin issuers relative to a baseline
where the stablecoins and stablecoin reserve assets would be subject to
applicable laws and regulations governing national bank and Federal
savings association assets and liabilities.
---------------------------------------------------------------------------
\139\ OCC Interpretive Letter 1174 (January4, 2021); OCC
Interpretive Letter 1172 (September 21, 2020).
---------------------------------------------------------------------------
For the baseline described above, the OCC assumes the most likely
regulatory outcome in the absence of the GENIUS Act and its
implementing regulations. Specifically, the OCC assumes that OCC
regulated banks would have been allowed to legally issue payment
stablecoins and would not have been subject to State stablecoin laws.
Additionally, the OCC assumes there would have been no broad Federal
stablecoin framework. This baseline assumes some OCC-regulated banks
would eventually begin issuing or increase their issuance of payment
stablecoins to compete with non-bank issuers' payment stablecoin
activities. Under this baseline, the OCC concludes that stablecoin
issuance by OCC-regulated bank affiliated permitted payment stablecoin
issuers would increase, but significantly less than such increases in
issuance after the implementation of the rules required by the GENIUS
Act. The OCC expects that OCC-regulated bank affiliated permitted
payment stablecoin issuers would issue fewer payment stablecoins under
this baseline because payment stablecoin issuance would be more costly
in absence of the proposed rule's provisions. In addition, the OCC
believes that stablecoin issuance would be more limited under the
baseline as there would be costs due to a lack of uniform Federal
rules. Nevertheless, the OCC believes that the most likely scenario is
that banks would still have issued some amount of payment stablecoins
under the baseline to meet consumer demand, and this would occur
despite the greater costs of issuance than would have occurred without
the GENIUS Act and its implementing regulations under the baseline.
Overall, to the extent that any requirements under applicable
baselines are substantially the same as the requirements in the
proposed rule, the OCC's analysis considered the effect of these
requirements to generally be de minimis. To the extent that there were
differences between the mandates in the proposed rule and the assumed
baselines, the OCC's analysis measures cost and benefits as the
differences in the costs and benefits of the mandates
[[Page 10278]]
in the proposed rule and the mandates in the applicable baselines.
Affected Parties
The OCC estimates that the proposed rule would affect a total of 29
entities that will become OCC-supervised permitted payment stablecoin
issuers. The OCC anticipates that 12 OCC-regulated national banks and
Federal savings associations will have permitted payment stablecoin
issuer affiliated subsidiaries and be affected by the proposed rule.
The OCC anticipates that at least 12 currently non-OCC regulated
institutions would become permitted payment stablecoin issuers or have
permitted payment stablecoin issuer affiliates. This number includes
potential non-bank financial companies, non-financial companies, as
well as already existing non-bank-financial-company payment stablecoin
issuers that could apply to become payment stablecoin issuers. For the
non-OCC-regulated-bank-affiliated permitted payment stablecoin issuers,
the OCC is using New York State stablecoin laws and regulations as a
baseline. The OCC also expects non-OCC regulated institutions could opt
to issue payment stablecoins through partners (e.g., white-label) or as
apart of consortia of issuers. The OCC estimates that there will be
five white-label or consortia issuers that will become permitted
payment stablecoin issuers. Depending on the composition of the
consortium, the baseline could be either New York State regulation or
the OCC-regulated national bank and Federal savings association
baseline.
Economic Analysis of Requirements and Expected Costs and Cost Savings
For calculations that require an estimate of the total value of
expected payment stablecoin issuance, the OCC used forecasts of
aggregate stablecoin issuances from private sector forecasts reported
in the media. The forecast data \140\ indicate upper bounds for payment
stablecoin issuance of $250 billion in 2025 and $500 billion in 2026.
The OCC reviewed costs associated with the proposed rule according to
the following categories: (a) reserve requirements; (b) redemption
requirements; (c) capital requirements; (d) custody requirements; and
(e) miscellaneous administrative and compliance requirements. The OCC
aggregated the cost estimates to generate a total cost estimate for
each baseline.
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\140\ See Muyao Shen, ``Stablecoin Sector May Reach $2 Trillion:
Standard Chartered,'' Bloomberg (April 15, 2025), https://www.bloomberg.com/news/articles/2025-04-15/stablecoin-sector-may-reach-2-trillion-standard-chartered-says. When the OCC applies a
compound growth rate from $250 billion as of the time of the
enactment of the GENIUS Act, market cap for 2026 is estimated at
$500 billion, market cap for 2027 at $1 trillion, and market cap for
2028 at $2 trillion.
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Reserve Requirements
The proposed rule implements section 4(a) of the GENIUS Act and
includes requirements governing the management, composition, and
reporting of reserves that back payment stablecoin issuance. Under the
proposed rule, a permitted payment stablecoin issuer must maintain and
demonstrate the operational capacity to monetize all types of reserves
it maintains. Because liquidity measurement and management are already
integral components of a bank's ongoing operations, the OCC expects
many permitted payment stablecoin issuers to already have the internal
practices in place to meet this requirement or to be able to
demonstrate monetization through the usual course of business. For
example, institutions that monetize United States Treasury securities
on a regular basis through the ordinary course of business may be able
to rely on evidence of sales to meet the monetization requirement.
Permitted payment stablecoin issuers may also be able to demonstrate
liquidity by establishing that they maintain appropriate repo
arrangements through which they can quickly pledge and receive liquid
funds. Additionally, large institutions under OCC supervision are
already subject to extensive monetization testing and analysis to
demonstrate liquidity. In these cases, the OCC does not expect
additional compliance costs due to the monetization requirement. To the
extent that demonstrating liquidity does not already reflect an
institution's current business practices, the requirement to
demonstrate monetization could increase operational expenses; however,
based on the institutions expected to become permitted payment
stablecoin issuers, we expect affected institutions (i.e., both non-OCC
regulated institutions and OCC-regulated institutions) would already
have internal liquidity practices in place and be able to meet the
requirement without additional burden.
The proposed rule states that for some permitted payment stablecoin
issuers--depending on the issuer's size, business model, and
operations--it may be necessary to periodically conduct monetization
transactions to demonstrate liquidity, which could introduce new costs
for some permitted payment stablecoin issuers. For example,
institutions that do not monetize certain assets already on a frequent
basis may need to conduct specific transactions that go beyond ordinary
business activities. In another context, trade associations have
pointed out that this could potentially lead to institutions having to
recognize a loss for a sale solely for demonstration purposes.\141\
However, based on the experience of OCC banks that currently engage in
monetization testing, the OCC expect these instances to be rare.
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\141\ See SIFMA, et al., ``Liquidity Coverage Ratio: Liquidity
Risk Measurement, Standards, and Monitors'' (January 31, 2014),
available at https://www.sifma.org/wp-content/uploads/2017/05/sifma-and-other-associations-submit-comments-to-multiple-regulators-on-liquidity-coverage-ratio.pdf.
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The proposed rule also includes requirements on the composition and
reporting of reserves. Identifiable reserves must be comprised of
specified high-liquid instrument types, such as cash, demand deposits,
and short-term United States Treasury bills, notes, and bonds. Relative
to the pre-existing regulatory baseline, the OCC estimates that non-
OCC-regulated-bank affiliated issuers would have already managed
reserves in a manner consistent with the proposed rule. New York's
Department of Financial Services (NYDFS) imposes restrictions on how
reserves can be held by stablecoin issuers and are similar to those in
the proposed rule.\142\ Therefore, the OCC estimates that non-OCC-
regulated-bank-affiliated PPSIs would incur no new costs to acquire and
report reserve assets in the instrument types required by the GENIUS
Act and the proposed rule as these institutions would already satisfy
these requirements under the baseline.\143\
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\142\ See New York Department of Financial Services, ``Guidance
on the Issuance of U.S. Dollar-Backed Stablecoins,'' (June 8, 2022),
https://www.dfs.ny.gov/industry_guidance/industry_letters/il20220608_issuance_stablecoins (describing New York State's reserve
requirements for U.S. dollar-backed stablecoins).
\143\ Current stablecoin issuers already hold reserves in high-
liquid instrument types. For example, Circle, the second largest
stablecoin issuer, holds 99.5% of its total reserves in cash, short-
term U.S. Treasury bills and notes, and repurchase agreements
secured by such obligations or cash. See BlackRock, ``Circle Reserve
Fund'' (last visited December 22, 2025), https://www.blackrock.com/cash/en-us/products/329365/.
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For OCC-regulated institutions, there could be opportunity costs
associated with holding reserves in the specified high-quality liquid
assets compared to potentially higher-yielding alternatives, given that
any prior payment stablecoin issuance may not have been subject to
NYDFS regulations. While the OCC does not attempt to quantify this
cost, which would fluctuate with current market rates at any given
point time, the OCC anticipates that many permitted payment stablecoin
issuers would likely have managed reserves in a manner consistent with
the reserve requirements
[[Page 10279]]
either to conform with market practices and remain competitive with
non-OCC regulated issuers or to comply with requirements that would be
applicable to payment stablecoins if held on banks' balance sheets.
Finally, the proposed rule mandates publication of a monthly
reserve composition report, examination of this report by a registered
public accounting firm, and monthly submission of certification of the
CEO and CFO (or the persons performing the equivalent functions) to the
OCC. These efforts will require various reporting, training, and
auditing expenses. The OCC estimates the average burden of the monthly
composition report to be two hours per response, or $3,144 (24 hours *
$131) per issuer on an annual basis and apply to all permitted payment
stablecoin issuers.\144\
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\144\ This estimate is based on public reporting burden for
comparable Federal Reserve Board reporting forms of similar burden.
See Board of Governors of the Federal Reserve System, ``Reporting
Forms'' (last visited December 22, 2025), https://www.federalreserve.gov/apps/reportingforms. The hourly wage rate is
based on data from the United States Bureau of Labor Statistics
(BLS) for depository credit intermediation (NAICS 522100). To
estimate compensation costs associated with the Guidelines, we use
$131 per hour, which is based on the average of the 90th percentile
for the occupations reported annually by the BLS plus an additional
38 percent to cover inflation and private sector benefits.
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Due to an overlap with existing State laws, the OCC does not expect
that the auditing mandate will impose additional burden on non-OCC
regulated institutions relative to the baseline; NYDFS requires
reserves to be subject to examination at least once per month by an
independent Certified Public Accountant. In contrast, the OCC
anticipates that OCC-regulated institutions would face higher auditing
costs from a monthly auditing requirement. OCC-regulated institutions
are generally audited quarterly. Moving to monthly audits performed by
an independent Certified Public Accountant would result in a threefold
increase in auditing frequency. The OCC estimates the incremental cost
in moving from quarterly to monthly certification of these reports by a
public accounting firm to be $40,000 per issuer on an annual basis.
Overall, the OCC attributes aggregate reporting costs of $75,456
($3,144 * 24 issuers) and auditing costs of $480,000 ($40,000 * 12
issuers) to the statute in 2026, relative to the existing regulatory
baseline. The total estimated costs associated with the reserve
requirements are therefore $555,456 ($555,456 = $75,456 + $480,000).
Redemption Requirements
The proposed rule would impose several mandates governing payment
stablecoin redemption. The OCC expects that non-OCC-regulated-bank-
affiliated permitted payment stablecoin issuers would have already
complied with such mandates under the baseline. Additionally, for OCC-
regulated banks, the OCC expects that such banks would have voluntarily
complied with these requirements and therefore generally incur no new
costs relative to the baseline.
With respect to the disclosure mandates required by the proposed
rule, the OCC does not expect that the proposed rule will cause OCC-
regulated bank-affiliated permitted payment stablecoin issuers to incur
significant new costs because current stablecoin regulations and money-
transmission laws that govern New York State stablecoin issuance
already impose similar mandates. For OCC-regulated banks that would be
permitted payment stablecoin issuers, the OCC expects that such
institutions would voluntarily provide such information to compete for
customers. Additionally, because OCC-regulated banks already comply
with several reporting and disclosure requirements in other business
lines, the OCC does not expect that there would be significant fixed
costs in complying with the redemption disclosure requirements.
Therefore, OCC-regulated banks that would be permitted payment
stablecoin issuers would also not incur significant new costs related
to these disclosure requirements.
The proposed rule defines ``timely'' to mean that the permitted
payment stablecoin issuer would have to redeem a payment stablecoin no
later than two-business days from the date of the requested redemption.
This is the same as New York State's guideline of two-business days and
comparable to existing stablecoin procedures. Therefore, non-OCC-
regulated-bank-affiliated permitted payment stablecoin issuers would
incur no new costs relative to the baseline. Additionally, the OCC
expects that OCC-regulated banks would have complied with the two-
business day mandate in the absence of this timeliness requirement due
to market conventions and competitive pressures. Since current
technology allows for nearly instantaneous transfers of account funds
within financial institutions, the OCC believes that the costs
associated with complying with the two-business day requirement would
be de minimis.
With respect to the provision in proposed Sec. 15.12(c) that
provides for an extended redemption period of seven calendar days in
the event of significant redemption demands--unless the OCC determines
that the issuer has the ability to redeem sooner in an orderly fashion
and through a fair and transparent process--the OCC expects that all
issuers would benefit from this extended period and there would be no
associated costs. Although the proposal requires notice to the OCC
within 24 hours of such a significant redemption event, the OCC expects
that any costs would be de minimis because notification is provided
through issuers' existing supervisory contacts.
Capital Requirements
In order to estimate the monetary cost of the capital requirements
in the proposed rule, the OCC assumed an average cost for each payment
stablecoin issuer and made assumptions regarding the inputs to the cost
calculations. To calculate the cost of equity capital requirements, the
OCC assumed that under the proposed rule, all payment stablecoin
issuers will initially be required to maintain the minimum amount of
capital which includes the $5 million requirement for de novo banks and
the ongoing 12-month-operating-expense backstop. The OCC assumed that
for the component of the capital requirement that is based on permitted
payment stablecoin issuer discretion that permitted payment stablecoin
issuers will not hold more capital than they would elect to in the
absence of the proposed rule. For the cost-of-equity-capital
calculation the OCC assumed:
In 2026 there will be 12 OCC-bank-affiliated permitted
payment stablecoin issuers and 12 non-OCC-bank affiliated permitted
payment stablecoin issuers.
Initially in 2026, the upper-bound for market size,
measured by the value of outstanding stablecoins, will be $500 billion.
Of this $500 billion, the OCC attributes $375 billion to non-OCC-bank
affiliated permitted payment stablecoin issuers and $125 billion to OCC
bank-affiliated permitted payment stablecoin issuers.
Under the baseline scenario, without the GENIUS Act and
the proposed rule, the OCC bank-affiliated permitted payment stablecoin
issuers would only issue $50 billion in payment stablecoins, which is
$75 billion less than the issuance under the GENIUS Act and the
proposed rule. Additionally, under the baseline, non-OCC-bank-
affiliated permitted payment stablecoin issuers would issue the same
amount of payment stablecoins that they would have under the GENIUS Act
and under the proposed rule. In total, under
[[Page 10280]]
the baseline, there is $425 billion in issuance, with $50 billion
attributable to OCC bank-affiliated permitted payment stablecoin
issuers and $375 billion attributable to non-OCC-bank affiliated
permitted payment stablecoin issuers.
The cost of equity capital is the ongoing yearly required
return on equity capital that that the OCC expects permitted payment
stablecoin issuers to pay to obtain equity to satisfy capital
requirements. The current estimate of the cost of capital in the
banking industry is 8.37%. Permitted payment stablecoin issuers incur
the cost of equity capital upfront by receiving a discounted payment
from investors for equity shares in the permitted payment stablecoin
issuers.
The 12-month operating expense amount for each permitted
stablecoin issuer will be 0.40% of outstanding stablecoins. The OCC
used this cost estimate as a conservative estimate of operating costs
of government money market funds and a large stablecoin issuer's 10-Qs
as reported pursuant to the Securities Exchange Act of 1934.
The OCC calculated the effect of capital mandates separately for
OCC-bank-affiliated permitted payment stablecoin issuers and for non-
OCC-bank affiliated permitted payment stablecoin issuers due to
differences in baselines. The OCC calculated the effect of capital
mandates for OCC-affiliated-bank permitted payment stablecoin issuers
under the bank and bank-affiliated-holding company rule baseline and
the OCC calculated the effect of the mandates under the New York State
baseline for non-OCC-regulated bank affiliated permitted payment
stablecoin issuers.
The OCC calculated the total minimum required capital under the
proposed rule for all expected permitted payment stablecoin issuers.
The first calculation is for the proposed rule's fixed capital
requirement of $5 million for de novo issuers. The OCC multiplied the
$5 million requirement by 24 to arrive at an aggregate capital
requirement of $120 million. The OCC calculated the cost of the
aggregate $120 million of equity capital to be roughly $10.0 million
which is 8.37% multiplied by the $120 million.
The second part of the cost of capital estimate includes the
proposed rule's operational backstop which is a requirement equal to 12
months of operating costs. The OCC estimated the 12-month-operating-
expenses to be 0.40% times the expected $500 billion in outstanding
stablecoin issues in 2026 which amounts to $2 billion ($500 billion *
.40%). The cost of this $2 billion of required capital is the amount of
capital times the cost of equity capital (8.37% as calculated by the
NYU Stern School) which totals $167.4 million. Because there is no
comparable backstop estimate in the regulatory baseline, we include the
full $167.4 million toward the cost of capital calculation. The total
cost of minimum capital requirements under the proposed rule is $177.4
million which is the sum of the $10.0 million cost of the de novo
permitted payment stablecoin issuer requirement plus the $167.4 million
cost of the operational backstop requirement.
For non-OCC-regulated-bank affiliated permitted payment stablecoin
issuers, to calculate total capital requirements, the OCC subtracted
the corresponding expected capital requirement for these permitted
payment stablecoin issuers under the New York State baseline. For the
New York State baseline, there is fixed capital requirement of $2
million per issuer that applies to stablecoin issuers under New York's
``Limited Purpose Trust Company Charter,'' and the BitLicense charter
does not mention a specific minimum capital requirement. The OCC
assumed that the minimum capital requirement under New York State rules
is at least the $2 million under the ``Limited Purpose Trust Company
Charter.'' For the 12 non-OCC-regulated-bank affiliated permitted
stablecoin issuers, the OCC calculated a minimum capital requirement of
$24 million.
For OCC-regulated-bank affiliated permitted payment stablecoin
issuers, the OCC assumed that permitted payment stablecoin issued by
OCC-regulated banks would have been treated as standard balance assets
and hence, all stablecoin reserve assets would have been subject to the
tier 1 leverage ratio, which is set at 4 percent. The OCC projected
that OCC-bank-affiliated issuers would be responsible for $50 billion
in stablecoin issuance in 2026 and would therefore have needed to hold
$2 billion in tier 1 capital ($2 billion = .04 x $50 billion).
Taken together, under the two assumed baselines for the 24 expected
permitted payment stablecoin issuers, the OCC calculated that these
permitted payment stablecoin issuers would have been required to hold
$2.024 billion ($2.024 billion = $2 billion + $24 million) under the
assumed baselines. The OCC calculated the cost of equity capital under
the baseline to be approximately $169.4 million ($169.4 million =
$2.024 billion x 8.37%). Therefore, after accounting for the regulatory
baseline, the OCC estimated the capital requirements under the proposed
rule to result in a net cost of $8 million 8 million = 177.4 million-
$169.4 million) relative to the regulatory baselines.
The last component of the minimum capital requirement is a self-
imposed amount of capital to be determined by each permitted payment
stablecoin issuer. The OCC estimated the cost of this additional
requirement to be zero.
Custody Requirements
The proposed rule imposes mandates governing certain custodial
activities of OCC-supervised institutions (including OCC-supervised
permitted payment stablecoin issuers).\145\ For the proposed rule, the
OCC expects that covered custodians for covered assets would likely
already be specialized custodial institutions for several assets
classes or already provide custodial services for crypto assets,
including stablecoins. The OCC concluded that since New York State has
already imposed substantially similar compliance mandates on covered
custodians for providing custodial services for covered assets, the
proposed rule will not result in new costs for covered custodial
activities for non-OCC supervised entities.
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\145\ Specifically, the proposed rule imposes requirements
relating to the custody of ``covered assets'' which include payment
stablecoin reserves, payment stablecoins used as collateral, and
private keys used to issue payment stablecoins, as well as cash and
other property received in the course of the provision of custodial
or safekeeping services for such assets.
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With respect to OCC supervised bank institutions affiliated
permitted payment stablecoin issuers, OCC regulated banks were
previously allowed to provide custody services for crypto assets, as
confirmed in Interpretive Letters 1170, 1183, and 1184. The OCC does
not expect that OCC banks would incur new costs as result of the
custody services mandates in the proposed rule because OCC banks
providing custody services for crypto assets generally followed
industry best practices and guidance governing non-fiduciary custody
activities. Therefore, the OCC concluded that OCC-regulated-bank
affiliated permitted payment stablecoin issuers would not incur new
compliance costs under the proposed rule.
Miscellaneous Administrative and Compliance Requirements
The proposed rule includes other administrative and compliance
mandates which include risk management mandates in Sec. 15.13; and
compliance mandates in Sec. 15.14. The OCC estimated the cost of all
mandates in these sections.
The OCC assessed that for non-OCC-regulated-bank affiliated
permitted
[[Page 10281]]
payment stablecoin issuers that miscellaneous administrative and
compliance mandates in the proposed rule effectively overlap with New
York State requirements with the exception of the higher frequency
confidential weekly reporting requirement and the regular 12- or 18- to
36-month examination requirement in the proposed rule.
The OCC assessed that for OCC-regulated-bank affiliated permitted
payment stablecoin issuers, miscellaneous administrative and compliance
mandates from the proposed rule overlap with the requirements under the
assumed regulatory baseline and that there would be no material new
costs to these issuers under the proposed rule.
The OCC estimated the weekly reporting requirement will require one
hour per week with a cost of $131.00 per hour. The total weekly
reporting cost for 12 non-OCC-regulated bank permitted payment
stablecoin issuers annually is therefore $81,744 ($81,744 = 52 * 131 *
12).
To comply with ongoing OCC exam requirements, the OCC estimated
that each of the 12 non-OCC-regulated bank permitted payment stablecoin
issuers will employ 1,000 employee hours annually on supervisory exams
for a total of $131,000 ($131,000 = 131 * 1,000). Therefore, the OCC
expected that these 12 permitted payment stablecoin issuers' total
expenditures on examinations to total $1,572,000 ($1,572,000 = 131,000
* 12).
In summary, the OCC estimated the ongoing miscellaneous
administrative and compliance mandate costs to total $1,653,744 per
year ($1,653,744 = $1,572,000 + 81,744).
Assessments
The OCC estimated that in total, the assessment schedule under the
proposed rule will save permitted payment stablecoin issuers a total of
$11.9 million in assessment fee costs in 2026. The OCC estimated that
the 12 OCC-bank-affiliated permitted payment stablecoin issuers would
pay an additional $2.1 million in assessment fees relative to their
baseline, but that the 12 non-OCC bank affiliated permitted payment
stablecoin issuers would save approximately $14 million relative to the
New York State baseline.
The OCC estimated that the assessment mandates in the proposed rule
will cost permitted payment stablecoin issuers and increase the OCC's
assessment revenue by $5.6 million in 2025 if the proposed rule were
implemented at the start of 2026. The OCC's projections are based on
the September 2025 assessment fee structure for existing OCC-supervised
banks applied to the stablecoin market and includes a 35 percent
discount for stablecoin issuers. The proposed rule suggests discounts
can be increased to as high as 55 percent if approved by the OCC, based
on agency needs. The projections do not consider future changes in
assessment fee structure or changes to fee schedules. The estimates
make the following assumptions:
All payment stablecoins will be issued by OCC regulated
permitted payment stablecoin issuers.
The market will be occupied by 12 non-OCC-regulated bank
permitted payment stablecoin issuers and 12 OCC-regulated bank
permitted payment stablecoin issuers in 2026.
While assessment revenue will increase for the OCC, the assessment
fees under the proposed rule for existing issuers that would have
otherwise been paid to NYDFS by non-OCC-regulated bank permitted
payment stablecoin issuers under the baseline would be considered a
cost savings to these permitted payment stablecoin issuers. NYDFS
budgets $15.5 billion in assessment revenue for State fiscal year (SFY)
2025-2026, which ends March 31, 2026. Applying NYDFS methodology for
SFY 2026-2027, New York State would collect $24.1 million in fees in
the absence of the GENIUS Act. It is anticipated that large stablecoin
issuers under NYDFS oversight, who pay the bulk of NYDFS assessments,
will migrate to OCC. Given the discounts in the proposed rule, and
difference in the fee structure, a migration to OCC from NYDFS
oversight will be a cost savings to the permitted payment stablecoin
issuers as NYDFS's assessment fee incorporates transaction volumes and
broader custodial volume supervision. The proposed rule does not
currently anticipate transaction volumes to factor into OCC assessment
calculations, and the OCC will not supervise custodians outside the
Federal banking system other than OCC-regulated PPSIs.
For OCC-regulated-bank-affiliated permitted payment stablecoin
issuers, the impact on assessments may be a cost savings relative to
the baseline as stablecoin reserve assets would move from bank balance
sheets to the balance sheets of the subsidiary permitted payment
stablecoin issuer. The cost savings are due to a 35% discount on
assessments from the standard assessment fee schedule in the proposed
rule. However, the enactment of the proposed rule would expand the
market beyond the baseline, resulting in a net increase in assessment
revenue. Under the proposed rule, the OCC estimated that permitted
payment stablecoin issuers affiliated with OCC-regulated-banks would
save $2.1 million in 2026 relative to their regulatory baseline.
Total Impact of Costs and Cost Savings
The OCC estimated that as a result of the proposed rule, permitted
payment stablecoin issuers would save $1.720 million on a net basis in
2026 due largely to relief in assessments, relative to the baselines
assumed. While the OCC estimated additional costs of $10,209,200
discussed above, from reserve, capital, and administrative compliance
associated with the proposed rule, the OCC estimated $11,929,204
million in assessment cost savings. The OCC also expected that ongoing
annual savings relative to the regulatory baselines would increase over
time as both stablecoin issuance and the number of permitted payment
stablecoin issuers increase in the coming years.
Executive Order 14192
Executive Order 14192, titled ``Unleashing Prosperity Through
Deregulation,'' requires that an agency, unless prohibited by law,
identify at least 10 existing regulations to be repealed when the
agency publicly proposes for notice and comment or otherwise
promulgates a new regulation with total costs greater than zero.
Executive Order 14192 further requires that new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
ten prior regulations. This proposed rule, if finalized as proposed, is
expected to be an E.O. 14192 deregulatory action.
List of Subjects
12 CFR Part 3
Administrative practice and procedure, Banks, Banking, Federal
Reserve System, Federal savings associations, Investments, National
banks, Reporting and recordkeeping requirements.
12 CFR Part 6
National banks, Insured Federal branches, and Federal savings
associations.
12 CFR Part 8
Banks, Banking, Fees, Foreign banking, Federal savings
associations, National banks, Reporting and recordkeeping requirements.
12 CFR Part 15
Federal savings association, Federal qualified payment stablecoin
issuer,
[[Page 10282]]
Foreign payment stablecoin issuer, National bank, Non-bank entity,
Permitted payment stablecoin issuer, State qualified payment stablecoin
issuer.
12 CFR Part 19
Administrative practice and procedure, Crime, Equal access to
justice, Federal savings associations, Investigations, National banks,
Penalties, Securities.
For the reasons set out in the preamble, the OCC proposes to amend
12 CFR chapter I as follows:
PART 3--CAPITAL ADEQUACY STANDARDS
0
1. The authority citation for part 3 continues to read as follows:
Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818,
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, 5412(b)(2)(B), and
Pub. L. 116-136, 134 Stat. 281.
0
2. Amend Sec. 3.22 by adding paragraph (i) to read as follows:
Sec. 3.22 Regulatory capital adjustments and deductions.
* * * * *
(i) Permitted Payment Stablecoin Issuers. Notwithstanding any other
provision in this section, an insured national bank or Federal savings
association that is consolidated with a permitted payment stablecoin
issuer as defined in Sec. 15.2 of this chapter must make the following
adjustments when calculating its capital ratios under Sec. 3.10:
(1) Deconsolidate any permitted payment stablecoin issuer from the
insured national bank's or Federal savings association's balance sheet;
(2) Deduct from common equity tier 1 capital any amount of positive
retained earnings that originated from the permitted payment stablecoin
issuer to the extent not paid out as dividends to the insured national
bank or Federal savings association; and
(3) Exclude any investment in (to the extent not deducted under
paragraph (i)(2) of this section) and receivable from the permitted
payment stablecoin issuer when calculating standardized total risk-
weighted assets, advanced approaches risk-weighted assets, average
total consolidated assets, and total leverage exposure, as applicable.
PART 6--PROMPT CORRECTIVE ACTION
0
3. The authority citation for part 6 continues to read as follows:
Authority: 12 U.S.C. 93a, 1831o, 5412(b)(2)(B
Sec. 6.2 [Amended]
0
4. Amend Sec. 6.2 by, in, in the definition of ``total assets'' the
first sentence, removing ``as provided in Sec. 3.22(a), (c), and (d)
of this chapter'' and adding ``as provided in Sec. 3.22(a), (c), (d),
and (i) of this chapter'' in its place.
PART 8--ASSESSMENT OF FEES
0
5. The authority citation for part 8 is revised to read as follows:
Authority: 12 U.S.C. 16, 93a, 481, 482, 1467, 1831c, 1867,
3102, 3108 and 5901 et seq.; and 15 U.S.C. 78c and 78l.
Sec. Sec. 8.1 through 8.8 [Designated as Subpart A]
0
6. Designate Sec. Sec. 8.1 through 8.8 as subpart A.
0
7. Add a heading for newly designated subpart A to read as follows:
Subpart A--Assessment of National Banks, Federal Savings
Associations, Federal Branches, and Federal Agencies
0
8. Revise Sec. 8.1 to read as follows:
Sec. 8.1 Scope and application.
The assessments contained in this subpart are made pursuant to the
authority contained in 12 U.S.C. 16, 93a, 481, 482, 1467, 1831c, 1867,
3102, 3108 and 5901 et seq.; and 15 U.S.C. 78c and 78l.
0
9. Amend Sec. 8.2 by:
0
a. Revising paragraphs (a)(5), (b)(2), and (c)(1);
0
b. Redesignating paragraphs (c)(2) through (4) as paragraphs (c)(3)
through (5);
0
c. Adding a new paragraph (c)(2);
0
d. Revising newly redesignated paragraph (c)(5); and
0
e. Adding paragraph (e).
The revisions and additions read as follows:
Sec. 8.2 Semiannual Assessments
(a) * * *
(5) The specific marginal rates and complete assessment schedule
will be published in the ``Notice of Office of the Comptroller of the
Currency Fees and Assessments,'' provided for at Sec. 8.8. Except as
otherwise provided in paragraphs (e) and (f) of this section, each
semiannual assessment is based upon the total assets shown in the
national bank's or Federal savings association's most recent
``Consolidated Reports of Condition and Income'' (Call Report)
preceding the payment date. Each national bank or Federal savings
association subject to the jurisdiction of the OCC on the date of the
second or fourth quarterly Call Report as appropriate, required by the
OCC under 12 U.S.C. 161 and 12 U.S.C. 1464(v), is subject to the full
assessment for the next six-month period. National banks and Federal
savings associations that are no longer subject to the jurisdiction of
the OCC as of the date of the first or third quarterly Call Report, as
appropriate, will receive a refund of assessments for the second three
months of the semiannual assessment period.
* * * * *
(b) * * *
(2) The amount of the semiannual assessment paid by each Federal
branch and Federal agency shall be computed at the same rate as
provided in table 1 to paragraph (a) of this section; however, except
with respect to assets attributable to activities permitted under 12
U.S.C. 5901 et seq., only the total domestic assets of the Federal
branch or agency shall be subject to assessment.
* * * * *
(c) * * *
(1) General rule. Except as provided in paragraph (c)(2) of this
section, in addition to the assessment calculated according to
paragraph (a) of this section, each independent credit card national
bank and independent credit card Federal savings association will pay
an assessment based on receivables attributable to credit card accounts
owned by the national bank or Federal savings association. This
assessment will be computed by adding to its asset-based assessment an
additional amount determined by its level of receivables attributable.
The dollar amount of the additional assessment will be published in the
``Notice of Office of the Comptroller of the Currency Fees and
Assessments,'' described at Sec. 8.8.
(2) Exception. The additional assessment under paragraph (c)(1) of
this section shall not apply to an independent credit card national
bank or an independent credit card Federal savings association if the
ratio of the institution's total gross receivables attributable to its
balance sheet assets does not exceed 50 percent, after taking into
account the institution's balance sheet assets attributable to
activities permitted under 12 U.S.C. 5901 et seq.
(3) Independent credit card national banks and independent credit
card Federal savings associations affiliated with full-service national
banks or Federal savings associations. * * *
* * * * *
(5) Reports of receivables attributable. Independent credit card
national banks and independent credit card Federal savings associations
will report receivables attributable data and assets attributable to
activities permitted under
[[Page 10283]]
12 U.S.C. 5901 et seq. data to the OCC semiannually at a time specified
by the OCC.
* * * * *
(e) Special rules governing the treatment of assets attributable to
minimum stablecoin reserve assets.
(1) To the extent the assets reported by the national bank or
Federal savings association on its Call Report reflect the minimum
stablecoin reserve assets that a stablecoin issuer must hold under 12
U.S.C. 5903, the semiannual general assessment fee for such institution
shall be calculated as follows:
(i) For assets other than those reflecting the minimum stablecoin
reserve assets that a stablecoin issuer must hold under 12 U.S.C. 5903,
using the formula set forth under paragraph (a) of this section to
determine the assessed amount.
(ii) For assets reflecting the minimum stablecoin reserve assets
that a stablecoin issuer must hold under 12 U.S.C. 5903, using the
formula set forth under paragraph (a) of this section, except that the
OCC will calculate the assessed amount by reducing the resulting figure
by thirty-five percent, or such other percentage (up to fifty-five
percent) as the OCC may deem appropriate for minimum stablecoin
reserves held by national banks and Federal savings associations based
on its experience supervising stablecoin issuers. The OCC will publish
the percentage reduction applied to assets reflecting minimum
stablecoin reserve assets on an annual basis in the Notice of Office of
the Comptroller Fees and Assessments.
(2) To the extent that the assets reported by the national bank or
Federal savings association on its Call Report do not reflect the
minimum stablecoin reserve assets that a stablecoin issuer must hold
under 12 U.S.C. 5903, the OCC shall increase the assessment set forth
in this paragraph for such institution to fully reflect the minimum
required stablecoin reserve assets for the amount of outstanding
issuances that the institution reports on quarterly reports pursuant to
12 CFR 15.14(i).
0
10. Amend Sec. 8.6 as follows:
Sec. 8.6 Fees for Special Examinations and Investigations
* * * * *
(c) * * *
(1) Independent trust national banks and independent trust Federal
savings associations. Except as provided in paragraph (c)(3) of this
section, the assessment of independent trust national banks and
independent trust Federal savings associations will include a fiduciary
and related asset component, in addition to the assessment calculated
according to Sec. 8.2, as follows:
* * * * *
(3) Effect of income from balance sheet assets attributable
activities permitted under the GENIUS Act. The additional assessment
under paragraph (c)(1) of this section shall not apply to an
independent trust national bank or an independent trust Federal savings
association if the institution generates more than 50 percent of its
interest and non-interest income from activities other than credit card
operations or trust activities, after taking into account the
institution's balance sheet assets attributable to activities permitted
under 12 U.S.C. 5901 et seq.
(4) Definitions. For purposes of this paragraph (c), the following
definitions apply:
(i) Affiliate, with respect to a national bank, has the same
meaning as this term has in 12 U.S.C. 221a(b);
(ii) Affiliate, with respect to Federal savings associations, has
the same meaning as in 12 U.S.C. 1462(7);
(iii) Full-service national bank is a national bank that generates
more than 50 percent of its interest and non-interest income from
activities other than credit card operations or trust activities and is
authorized according to its charter to engage in all types of
permissible banking activities;
(iv) Full-service Federal savings association is a Federal savings
association that generates more than 50 percent of its interest and
non-interest income from activities other than credit card operations
or trust activities and is authorized according to its charter to
engage in all types of activities permissible for Federal savings
associations;
(v) Independent trust national bank is a national bank that has
trust powers, does not primarily offer full-service banking, and is not
affiliated with a full-service national bank;
(vi) Independent trust Federal savings association is a Federal
savings association that has trust powers, does not primarily offer
full-service banking, and is not affiliated with a full-service Federal
savings association; and
(vii) Fiduciary and related assets are those assets reported on
Schedule RC-T of FFIEC Forms 031 and 041, Line 10 (columns A and B) and
Line 11 (column B), any successor form issued by the FFIEC, and any
other fiduciary and related assets defined in the ``Notice of Office of
the Comptroller of the Currency Fees and Assessments.''
(5) Additional reporting. Independent trust national banks and
independent trust Federal savings associations will report the
percentage of their interest and non-interest income from activities
other than credit card operations or trust activities, including from
activities permitted under 12 U.S.C. 5901 et seq., to the OCC
semiannually at a time specified by the OCC.
0
11. Add subpart B, to read as follows:
Subpart B--Assessment of Certain Other Institutions
Sec. 8.9 Scope and application.
Sec. 8.10 Semiannual assessment for certain institutions.
Sec. 8.11 Fees for certain institutions engaged in custodial and
safekeeping activities permitted under 12 U.S.C. 5901 et seq.
Sec. 8.12 Fees for special examinations and investigations.
Sec. 8.13 Payment of interest on delinquent assessments and
examination and investigation fees.
Sec. 8.9 Scope and application.
The assessments contained in this subpart are made pursuant to the
authority contained in 12 U.S.C. 93a, 481, 482, and 5901 et seq.
Sec. 8.10 Semiannual assessment for certain institutions.
(a) Semiannual assessment. This section applies to Nonbank Federal
Qualified Payment Stablecoin Issuers, Foreign Payment Stablecoin
Issuers subject to the OCC's jurisdiction, and State Qualified Payment
Stablecoin Issuers subject to 12 U.S.C. 5903(d), except to the extent
any such institution remains solely supervised by a State payment
stablecoin regulator. Each institution subject to this section shall
pay to the OCC a semiannual assessment fee, due by March 31 and
September 30 of each year, for the six-month period beginning on
January 1 and July 1 before each payment date. Except as provided under
paragraph (a)(6) of this section, the OCC will calculate the amount due
under this section and provide a notice of assessments to each
institution no later than 7 business days prior to collection on March
31 and September 30 of each year. In setting assessments, the
semiannual assessment will be calculated as follows:
[[Page 10284]]
Table 1 to Paragraph (a)
----------------------------------------------------------------------------------------------------------------
If the national bank's or Federal savings The semiannual assessment is:
association's total assets (consolidated domestic -----------------------------------------------------------
and foreign subsidiaries) are:
----------------------------------------------------- This amount--base Plus marginal Of excess over--
Over-- But not over-- amount rates
----------------------------------------------------------------------------------------------------------------
Column A........................ Column B.......... Column C.......... Column D.......... Column E
Million......................... Million........... .................. .................. Million
(dollars)....................... (dollars)......... (dollars)......... .................. (dollars)
0............................... 2................. X1................ 0................. ..................
2............................... 20................ X2................ Y1................ 2
20.............................. 100............... X3................ Y2................ 20
100............................. 200............... X4................ Y3................ 100
200............................. 1,000............. X5................ Y4................ 200
1,000........................... 2,000............. X6................ Y5................ 1,000
2,000........................... 6,000............. X7................ Y6................ 2,000
6,000........................... 20,000............ X8................ Y7................ 6,000
20,000.......................... 40,000............ X9................ Y8................ 20,000
40,000.......................... 250,000........... X10............... Y9................ 40,000
250,000......................... .................. X11............... Y10............... 250,000
----------------------------------------------------------------------------------------------------------------
(1) Every institution falls into one of the asset-size brackets
denoted by Columns A and B. An institution's assessment is composed of
two parts. The first part is the calculation of a base amount of the
assessment, which is computed on the assets of the institution, up to
the lower endpoint (Column A) of the bracket in which it falls. This
base amount of the assessment is calculated by the OCC in Column C.
(2) The second part is the calculation of assessments due on the
institution's remaining assets in excess of Column E. The excess is
assessed at the marginal rate shown in Column D.
(3) The total semiannual assessment is the amount in Column C, plus
the amount of the institution's assets in excess of Column E, times the
marginal rate in Column D: Assessments = C + [(Assets-E) x D].
(4) Each year, the OCC may index the marginal rates in Column D to
adjust for the percentage in the level of prices, as measured by
changes in the Gross Domestic Product Implicit Price Deflator (GDPIPD)
for each June-to-June period. The OCC may at its discretion adjust
marginal rates by amounts other than the percentage change in the
GDPIPD. The OCC will also adjust the amounts in Column C to reflect any
change made to the marginal rate.
(5) The specific marginal rates and complete assessment schedule
will be published in the ``Notice of Office of the Comptroller of the
Currency Fees and Assessments,'' provided for at Sec. 8.8. Except as
otherwise provided in paragraph (a)(6) of this section, each semiannual
assessment is based upon the assets shown on the most recent quarterly
report filed by each institution pursuant to 12 CFR 15.14(i) preceding
the payment date. Each institution subject to the jurisdiction of the
OCC beginning on the second and fourth calendar quarters is subject to
full assessment for the next period. Institutions that are no longer
subject to the jurisdiction of the OCC at the end of the first and
third calendar quarters, as appropriate, will receive a refund of
assessments for the second three months of the semiannual assessment
period.
(6)(i) To the extent the assets reported by an institution subject
to this section on its quarterly report reflect the minimum stablecoin
reserve assets that a stablecoin issuer must hold under 12 U.S.C. 5903,
the semiannual assessment for such institution shall be calculated as
follows:
(A) For assets other than those reflecting the minimum stablecoin
reserve assets that a stablecoin issuer must hold under 12 U.S.C. 5903,
using the formula set forth under paragraph (a) to determine the
assessed amount.
(B) For assets reflecting the minimum stablecoin reserve assets
that a stablecoin issuer must hold under 12 U.S.C. 5903, using the
formula set forth under this paragraph (a), except that the OCC will
calculate the assessed amount by reducing the resulting figure by
thirty-five percent, or such other percentage (up to fifty-five
percent) as the OCC may deem appropriate for minimum stablecoin
reserves held by institutions subject to this section based on its
experience supervising stablecoin issuers. The OCC will publish the
percentage reduction applied to assets reflecting minimum stablecoin
reserve assets on an annual basis in the Notice of Office of the
Comptroller Fees and Assessments.
(ii) To the extent that the assets reported by the institution on
its quarterly report do not reflect the minimum stablecoin reserve
assets that a stablecoin issuer must hold under 12 U.S.C. 5903, the OCC
shall increase the assessment set forth in this paragraph (a) for such
institution to fully reflect the minimum required stablecoin reserve
assets for the amount of outstanding issuances that the institution
reports.
(b) Surcharge based on the condition of the stablecoin issuer.
Subject to any limit that the OCC prescribes in the ``Notice of Office
of the Comptroller of the Currency Fees and Assessments,'' the OCC
shall apply a surcharge to the semiannual assessments computed in
accordance with paragraph (a) of this section. This surcharge will be
determined by multiplying the semiannual assessment computed in
accordance with paragraph (a) of this section by--
(1) 1.5, in the case of any institution subject to this section
that was found at its most recent examination to be a problem
institution and require rehabilitation; and
(2) 2.0, in the case of any institution subject to this section
that to have material financial or operational deficiencies that
threaten the viability of the institution at its most recent
examination prior to December 31 or June 30, as appropriate.
(c) Additional assessments. Notwithstanding paragraph (a) of this
section, all State Qualified Payment Stablecoin Issuers subject to the
OCC's jurisdiction may be subject to the assessments described in 8.12
in connection with carrying out the responsibilities of the Office of
the Comptroller, including in connection with 12 U.S.C. 5903(d)(3) and
5906(e)(2).
[[Page 10285]]
Sec. 8.11 Fees for certain institutions engaged in custodial and
safekeeping activities.
(a) This section applies to institutions subject to Sec. 8.10 for
which 50 percent or more of their interest and non-interest income is
derived from custodial or safekeeping activities permitted under 12
U.S.C. 5901 et seq. The assessment for those institutions engaged in
the custodial and safekeeping activities described in 12 U.S.C. 5901 et
seq. shall include a component for assets attributable to such
activities, in addition to the assessment calculated according to Sec.
8.10, as follows:
(1) Minimum fee. Institutions subject to this paragraph (a) will
pay a minimum fee, to be provided in the ``Notice of Office of the
Comptroller of the Currency Fees and Assessments.''
(2) Additional amount for certain assets in excess of $1 billion.
Institutions subject to this paragraph (a) engaged in custodial and
safekeeping activities permitted under 12 U.S.C. 5901 et seq. with
assets attributable to such activities in excess of $1 billion will pay
an amount that exceeds the minimum fee. The amount to be paid will be
calculated by multiplying the amount of assets attributable to the
safekeeping and custodial activities permitted under 12 U.S.C. 5901 et
seq. by a rate or rates provided by the OCC in the ``Notice of Office
of the Comptroller of the Currency Fees and Assessments.''
(b) Surcharge based on the condition of the stablecoin issuer.
Subject to any limit that the OCC prescribes in the ``Notice of Office
of the Comptroller of the Currency Fees and Assessments,'' the OCC
shall apply a surcharge to the semiannual assessments computed in
accordance with paragraph (a) of this section. This surcharge will be
determined by multiplying the semiannual assessment computed in
accordance with paragraph (a) of this section by--
(1) 1.5, in the case of any institution subject to this section
that was found at its most recent examination to be a problem
institution and require rehabilitation; and
(2) 2.0, in the case of any institution subject to this section
that to have material financial or operational deficiencies that
threaten the viability of the institution at its most recent
examination prior to December 31 or June 30, as appropriate.
Sec. 8.12 Fees for special examinations and investigations.
(a) Fees. With respect to any institution subject to the
jurisdiction of the OCC under the GENIUS Act, the OCC may assess a fee
for:
(1) Conducting special examinations or investigations, including
any supervision and enforcement related activities described in 12
U.S.C. 5905 or 12 U.S.C. 5906(e)(2);
(2) Conducting special examinations and investigations of
affiliates of institutions subject to this subpart;
(3) Reviewing requests for waivers as referenced in 12 U.S.C.
5903(d)(3); and
(4) Conducting special examinations and investigations made
pursuant to 12 CFR part 5, Rules, Policies, and Procedures for
Corporate Activities.
(b) Notice of Office of Comptroller of the Currency Fees and
Assessments. The OCC publishes the fee schedule for special
examinations and investigations under this subpart in the ``Notice of
Office of the Comptroller of the Currency Fee and Assessments''
described in Sec. 8.8.
Sec. 8.13 Payment of interest on delinquent assessments and
examination and investigation fees.
(a) All institutions subject to subpart B shall pay to the OCC
interest on its delinquent payments of semiannual assessments. In
addition, each institution subject to a special examination or
investigation fee shall pay to the OCC interest on its delinquent
payments of special examination and investigation fees. Semiannual
assessment payments will be considered delinquent if they are received
after the time for payment specified in Sec. 8.10. Special examination
and investigation fees will be considered delinquent if not received by
the OCC within 30 calendar days of the invoice date.
(b) In the event that an institution believes that the notice of
assessments or special examination and investigation fees contains an
error or miscalculation, the institution may provide the OCC with a
written request for a revised notice and a refund of any overpayments.
Any such request for a revised notice and refund must be made after
timely payment of the semiannual assessment under the dates specified
in Sec. 8.10 or timely payment of the special examination and
investigation fee within 30 calendar days of the invoice date.
(1) Within 30 calendar days of receipt of such request, the OCC
shall either--
(i) Refund the amount of the overpayment; or
(ii) Provide notice of its unwillingness to accept the request for
a revised notice of assessments. In the latter instance, the OCC and
the entity claiming the overpayment shall thereafter attempt to reach
agreement on the amount, if any, to be refunded; the OCC shall refund
this amount within 30 calendar days of such agreement.
(2) The OCC shall be considered delinquent if it fails to return an
overpayment in accordance with the time limitations specified in this
paragraph (b). The OCC shall pay interest on any such delinquent
payments.
(c) Interest on delinquent payments, as described in paragraphs (a)
and (b) of this section, will be assessed beginning the first calendar
day on which payment is considered delinquent, and on each calendar day
thereafter up to and including the day payment is received. Interest
will be simple interest, calculated for each day payment is delinquent
by multiplying the daily equivalent of the applicable interest rate by
the amount delinquent. The rate of interest will be the United States
Treasury Department's current value of funds rate (the ``TFRM rate'');
that rate is issued under the Treasury Fiscal Requirements Manual and
is published quarterly in the Federal Register. The interest rates
applicable to a delinquent payment will be determined as follows:
(1) For delinquent days occurring from January 1 to March 31, the
rate will be the TFRM rate that is published the preceding December for
the first quarter of the ensuing year.
(2) For delinquent days occurring from April 1 to June 30, the rate
will be the TFRM rate that is published the preceding March for the
second quarter of that year.
(3) For delinquent days occurring from July 1 to September 30, the
rate will be the TFRM rate that is published the preceding June for the
third quarter of that year.
(4) For delinquent days occurring from October 1 to December 31,
the rate will be the TFRM rate that is published the preceding
September for the fourth quarter of that year.
0
12. Add part 15 to read as follows:
PART 15--PAYMENT STABLECOINS
Subpart A--Purpose, Scope, Definitions, and Severability
Sec.
15.1 Purpose and scope.
15.2 Definitions.
15.3 Severability.
Subpart B--Permitted Payment Stablecoin Issuers and State Qualified
Payment Stablecoin Issuers
15.10 Activities.
15.11 Reserve assets.
15.12 Redemption.
15.13 Risk management.
15.14 Audits, reports, and supervision.
[[Page 10286]]
15.15 State qualified payment stablecoin issuers.
15.16 Unusual and exigent circumstances.
Subpart C--Custody
15.20 Definitions.
15.21 Covered asset custodial property requirements.
15.22 Use of omnibus accounts.
15.23 Self-custody hardware and software exclusion.
Subpart D--Applications and Registrations
15.30 Approval of permitted payment stablecoin issuers.
15.31 Foreign payment stablecoin issuers.
15.32 Registration of foreign payment stablecoin issuers.
15.33 Revocation or rescission of approval.
Subpart E--Capital and Operational Backstop
15.40 Capital elements.
15.41 Minimum capital and backstop.
15.42 Individual additional capital or backstop requirement.
Authority: 12 U.S.C. 1, 24, 27, 92a, 93a, 161, 1461, 1462a,
1463, 1464, 1467a, 1818, 3101 through 3109, 5412, 5901 through 5916.
PART 15--STABLECOIN
Subpart A--Purpose, Scope, Definitions, and Severability
Sec. 15.1 Purpose and scope.
(a) Purpose. This part implements the Guiding and Establishing
National Innovation for U.S. Stablecoins Act (12 U.S.C. 5901 et seq.)
(GENIUS Act) with respect to entities for which the OCC is authorized
to issue regulations or exercise its enforcement authority under the
Act.
(b) Scope. This part applies to the following entities' activities
related to payment stablecoins and certain custody activities--
(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 Sec. 15.15 or Sec.
15.16.
Sec. 15.2 Definitions.
For purposes of this part, the following definitions apply
Affiliate means a person that controls, is controlled by, or is
under common control with another person.
Bank Secrecy Act means:
(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.).
Board of directors means a permitted 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
permitted payment stablecoin issuer or applicant.
Control. A person controls 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.
Customer means a person that purchases (through any consideration)
the products or services of another person.
Deposit means ``deposit'' as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813(l)).
Depository institution means:
(1) A depository institution as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813(c)(1)); or
(2) A credit union.
Digital asset means any digital representation of value that is
recorded on a cryptographically secured distributed ledger.
Director means 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.
Distributed ledger means 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.
Distributed ledger protocol means publicly available and accessible
executable software deployed to a distributed ledger, including smart
contracts or networks of smart contracts.
Eligible financial institution means
(1) A person that:
(a) Is eligible to hold reserve assets in custody under section
10(a) of the 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
primary 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
paragraph (2) of this definition, as well as policies and procedures to
ensure compliance; or
(2) A Federal Reserve Bank.
Executive officer means 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 includes any individual serving in
the functional capacity of the listed titles or their equivalent,
without regard to title, salary, or compensation.
Fair value means fair value as determined under GAAP.
FDIC means the Federal Deposit Insurance Corporation.
Federal branch has 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 means the following
entities that are approved by the OCC, pursuant to 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.
Federal Reserve means the Board of Governors of the Federal Reserve
System.
Foreign payment stablecoin issuer means 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 section
2(23) of the GENIUS Act (12 U.S.C. 5901(23)).
GAAP means generally accepted accounting principles as used in the
United States.
Immediate family means the spouse of an individual, the
individual's minor
[[Page 10287]]
children, and any of the individual's children (including adults)
residing in the individual's home.
Insider means a principal shareholder, an executive officer, a
director, or a related interest of or the immediate family of any of
these persons.
Insured credit union has the meaning given to that term in section
101 of the Federal Credit Union Act (12 U.S.C. 1752).
Insured depository institution means:
(1) An insured depository institution, as defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2)); and
(2) An insured credit union.
Monetary value means a national currency or deposit denominated in
a national currency.
Money means
(1) Monetary value; and
(2) 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.
National currency means--
(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 means a person that is not a depository institution
or subsidiary of a depository institution.
Nonpublic personal information, as used in this part:
(1) Means information--
(i) Provided by a customer to a permitted payment stablecoin issuer
to obtain a financial product or service;
(ii) About a customer resulting from any transaction involving a
financial product or service between the permitted payment stablecoin
issuer and a customer; or
(iii) Otherwise obtained by the permitted payment stablecoin issuer
in connection with providing a financial product or service to a
customer; and
(2) 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 means the Office of the Comptroller of the Currency.
Outstanding issuance value means the total consolidated par value
of all of a permitted payment stablecoin issuer's payment stablecoins.
Payment stablecoin, as used in this part:
(1) Means 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; and
(2) Does not include a digital asset that is a--
(i) National currency;
(ii) Deposit, 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).
Permitted payment stablecoin issuer means 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).
Person means an individual, partnership, company, corporation,
association, trust, estate, cooperative organization, or other business
entity, incorporated or unincorporated.
Principal shareholder means 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.
Private key means the unique alphanumeric sequence that allows an
individual to transfer a particular unit of a digital asset using a
distributed ledger.
Publicly available information means 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.
Registered public accounting firm has the meaning set forth in
section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(12)).
Related interest of a person means:
(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.
Reserve asset means an asset maintained by a permitted payment
stablecoin issuer of a type enumerated in Sec. 15.11(b).
Stablecoin Certification Review Committee has the meaning set forth
in section 2 of the GENIUS Act (12 U.S.C. 5901(27)).
State means each of the several States of the United States, the
District of Columbia, and each territory of the United States.
State chartered depository institution has the meaning given the
term ``State depository institution'' in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813(c)(5)).
State payment stablecoin regulator means a State agency that has
primary regulatory and supervisory authority in such State over
entities that issue payment stablecoins.
State qualified payment stablecoin issuer means 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.
Subsidiary has the meaning set forth in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813(w)(4)).
Trading volume means 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 means a customer that resides in the United
States.
Sec. 15.3 Severability.
The provisions of this part are separate and severable from one
[[Page 10288]]
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.
Subpart B--Permitted Payment Stablecoin Issuers and State Qualified
Payment Stablecoin Issuers
Sec. 15.10 Activities.
(a) Permitted activities. A permitted payment stablecoin issuer may
only:
(1) Issue payment stablecoins;
(2) Redeem payment stablecoins;
(3) Manage 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;
(4) Provide custodial or safekeeping services for payment
stablecoins, required reserves, or private keys of payment stablecoins,
consistent with subpart C of this part;
(5) Assess fees associated with purchasing or redeeming payment
stablecoins;
(6) Act as principal or agent with respect to any payment
stablecoin;
(7) Pay fees to facilitate customer transactions; and
(8) Undertake any other activities that directly support any of the
activities described in paragraphs (a)(1) through (4) of this section.
(b) Rule of construction. Nothing in paragraph (a) of this section
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.
(c) Prohibitions. A permitted payment stablecoin issuer must not:
(1) Use a deceptive name by 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''.
(2) Market a payment stablecoin in such a way that a reasonable
person would perceive the payment stablecoin to be:
(i) Legal tender as described in 31 U.S.C. 5103;
(ii) Issued by the United States; or
(iii) Guaranteed or approved by the Government of the United
States.
(3) 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.
(4) 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.
(i) The OCC presumes that a permitted payment stablecoin issuer is
paying interest or yield (whether in cash, tokens, or other
consideration) to the holder of a payment stablecoin 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 of the issuer or
related third party to pay interest or yield to the affiliate or
related third party;
(B) The affiliate or related third party identified in paragraph
(c)(4)(i)(A) of this section or, if the person is a related third
party, an 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 payment stablecoin issuer solely in
connection with the holding, use, or retention of such payment
stablecoin; and
(C) To the extent the person, or an affiliate of the person,
identified in paragraph (c)(4)(i)(A) 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 identified in paragraph (c)(4)(i)(B) of this section
considers the holder of the payment stablecoin to be the holder of a
payment stablecoin issued by the permitted payment stablecoin issuer on
the related third party's behalf or under the related third party's
branding.
(ii) For purposes of paragraph (c)(4)(i) of this section, a related
third party means:
(A) A person offering to pay interest or yield to payment
stablecoin holders as a service; and
(B) Any person that the issuer issues payment stablecoins on the
person's behalf or under the person's branding.
(iii) A permitted payment stablecoin issuer may rebut the
presumption in paragraph (c)(4)(i) of this section 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) of this section and is not an attempt to evade the
prohibition.
(5) Pledge, rehypothecate, or reuse any reserve assets required
under Sec. 15.11 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 Sec. 15.11(b)(4) or (5);
(ii) Satisfying obligations associated with the use, receipt, or
provision of standard custodial services; 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 maturity of 93 days or less may be sold as
purchased securities in repurchase agreements, 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. All repurchase agreements under this paragraph (c)(5)
wherein the Treasury bills that are sold as purchased securities have a
maturity of 93 days or less are approved by the OCC.
(6) 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
this part.
Sec. 15.11 Reserve assets.
(a) Reserve requirement. A permitted payment stablecoin issuer
must:
(1) 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.
(2) 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.
(3) Only withdraw any surplus reserve assets in excess of
outstanding issuance value once per month, upon the publication of the
composition report required by paragraph (e) of this section. A
permitted payment stablecoin issuer may withdraw any surplus reserve
assets, calculated and reported
[[Page 10289]]
as of the last day of the previous month, after the information in the
month-end report is examined and certified pursuant to paragraph (f) of
this section, provided that a permitted payment stablecoin issuer may
not withdraw any reserve assets if the withdrawal would cause the
current fair value of reserve assets to fall below the current
outstanding issuance value, calculated as of the day of withdrawal.
(b) Composition. The reserve assets required under paragraph (a) of
this section must comprise exclusively:
(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;
(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;
(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, 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 paragraphs (b)(1)
through (5) of this section;
(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.
In determining whether a potential reserve asset qualifies as ``any
other similarly liquid Federal Government-issued asset,'' 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 this
paragraph (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 those of the
assets allowed under this paragraph (b) including interest rate risk
and counterparty credit risk; and
(iv) Whether the asset introduces additional risks that may be
difficult for permitted payment stablecoin issuers to manage; or
(8) Any reserve described in paragraphs (b)(1) through (3) or
paragraph (b)(6) or (7) of this section in tokenized form, provided
that such reserves comply with all applicable laws and regulations.
Option A for Paragraph (c)
(c) Asset diversification and concentration.
(1) A permitted payment stablecoin issuer must maintain reserve
assets that are sufficiently diverse to manage potential credit,
liquidity, interest rate, and price risks. A permitted payment
stablecoin issuer must 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.
(2) A permitted payment stablecoin issuer will be deemed to satisfy
the requirements of paragraph (c)(1) of this section if on each
business day:
(i) The permitted payment stablecoin issuer maintains at least 10
percent of its 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) The 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;
(iii) The 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;
(iv) The permitted payment stablecoin issuer maintains no more than
50 percent of the amount required in paragraph (c)(2)(i) of this
section at any one eligible financial institution; and
(v) The permitted payment stablecoin issuer's total stock of
reserve assets have a weighted average maturity of no more than 20
days.
Option B for paragraph (c)
(c) Asset diversification and concentration. A permitted payment
stablecoin issuer must on each business day:
(1) Maintain at least 10 percent of its reserve assets as deposits
or insured shares payable upon demand or money standing to the credit
of an account with a Federal Reserve Bank;
(2) 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
unconditionally within five business days on pending sales of reserve
assets, maturing reserve assets, or other maturing transactions;
(3) Maintain 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;
(4) Maintain no more than 50 percent of the amount required in
paragraph (c)(1) of this section at any one eligible financial
institution; and
(5) Maintain reserve assets with a weighted average maturity of no
more than 20 days.
(d) Minimum insured amount. A permitted payment stablecoin issuer
with an outstanding issuance value of $25 billion or more must, on each
[[Page 10290]]
business day, maintain at least 0.5 percent of its reserve assets, up
to a cap of $500 million, in the form of insured deposits or insured
shares at an insured depository institution.
(e) Composition report. By noon on the last day of each month, a
permitted payment stablecoin issuer must publish the monthly
composition of the issuer's reserves held pursuant to the GENIUS Act as
of noon on the last day of the previous month on the website of the
issuer, using a format substantially similar to the template provided
in table 1 to this paragraph (e), containing:
(1) The total number of outstanding payment stablecoins issued by
the issuer; and
(2) The amount and composition of the reserves described in
paragraph (a) of this section, including the average tenor and
geographic location of custody of each category of reserve instruments.
Table 1 to Paragraph (e)--Monthly Composition Template
------------------------------------------------------------------------
------------------------------------------------------------------------
As of YYYYMMDD Amount Geographic Average
In thousands of U.S. Dollars location tenor
------------------------------------------------------------------------
Number of Outstanding payment stablecoins
------------------------------------------------------------------------
1 \1\......
2..........
3..........
4.......... TOTAL OUTSTANDING
PAYMENT STABLECOINS.
------------------------------------------------------------------------
Fair Value of Reserve Assets
------------------------------------------------------------------------
5.......... Deposits:
6.......... Insured deposits...
7.......... Uninsured deposits.
8.......... Treasury bills,
Treasury notes, or
Treasury bonds.
9.......... Other similarly liquid
Federal Government-
issued assets
approved by OCC.
10......... Money received under
repurchase agreements.
11......... Reverse repurchase
agreements.
12......... Securities issued by
an investment company
solely invested in
qualifying reserve
assets.
13......... Reserves in tokenized
form \2\.
14......... Total Reserve Assets
\3\.
15......... Outstanding repurchase
agreement liabilities.
16......... Total Reserve Assets
net of Outstanding
Repurchase Agreement
Liabilities.
------------------------------------------------------------------------
\1\ List different classes of payment stablecoin separately, if
applicable. To the extent that different classes of payment
stablecoins are secured by distinct pools of reserve assets, permitted
payment stablecoin issuers should publish a composition table for each
class of payment stablecoin and describe the legal mechanism for how
the assets are separately secured.
\2\ Permitted payment stablecoin issuers must separately list any
reserves in tokenized form by category of reserve asset, using
multiple rows if appropriate.
\3\ Do not double count any reserve assets that may be listed in more
than one row for purposes of computing the total.
(f) Monthly certification; examination of reports by registered
public accounting firm. (1) By noon on the last day of each month, a
permitted payment stablecoin issuer must have the information disclosed
in the previous month-end report required under paragraph (e) of this
section examined by a registered public accounting firm. The registered
public accounting firm's examination report must be published on the
website of the issuer at the same time as the month-end report required
under paragraph (e).
(2) Each month, the Chief Executive Officer and Chief Financial
Officer (or the persons performing the equivalent functions) of a
permitted payment stablecoin issuer must submit a certification as to
the accuracy of the monthly report required under paragraph (e) of this
section to the OCC.
(g) Failure to meet minimum reserve assets requirement. (1) A
permitted payment stablecoin issuer must notify the OCC through its
supervisory office on any day in which its reserve asset amount has
fallen below the required minimum in paragraph (a) of this section.
(2) A permitted payment stablecoin issuer that fails to satisfy the
minimum reserve asset requirement in paragraph (a) of this section at
any time:
(i) Is prohibited from issuing any new payment stablecoins
immediately 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; and
(ii) May not resume issuance until the permitted payment stablecoin
issuer satisfies its minimum reserve asset requirement.
(3) If a permitted payment stablecoin issuer fails to meet its
minimum reserve asset requirement for 15 consecutive business days
(which may be extended in the OCC's sole discretion), it must:
(i) Begin liquidation of reserve assets and redemption of
outstanding payment stablecoins, consistent with Sec. 15.12; and
(ii) Not charge customers a fee to redeem their payment stablecoins
at any time during the liquidation.
(4) If at any point the OCC determines that a permitted payment
stablecoin issuer has not demonstrated that it meets the reserve asset
requirements in paragraph (a), (b), (c), or (d) of this section, 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 paragraph (a), (b), (c), or (d) within a
reasonable period, the OCC may order the issuer to initiate redemption
of all outstanding payment stablecoins. 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.
Sec. 15.12 Redemption.
(a) Redemption policy. A permitted payment stablecoin issuer must
publicly
[[Page 10291]]
disclose its redemption policy and include, at a minimum, the following
information:
(1) The timeframe in which the issuer will redeem payment
stablecoins and the timeframe under which the issuer is required to
redeem payment stablecoins under paragraph (b)(1)(i) of this section;
(2) A statement explaining the limitation in paragraph (b)(1)(ii)
of this section;
(3) A statement explaining the scenarios under which the redemption
period may be extended as described in paragraph (c) of this section;
(4) 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; and
(5) 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.
(b) Redemption policy requirements. A permitted payment stablecoin
issuer's redemption policy must provide:
(1) Clear and conspicuous procedures for timely redemption of
outstanding payment stablecoins:
(i) That timely redemption may not exceed two business days
following the date of the requested redemption; and
(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.
(2) [Reserved]
(c) Timeliness extended in certain scenarios. (1) 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 period for timely redemption described in paragraph (b)(1) of this
section is immediately extended to seven calendar days by operation of
this paragraph (c)(1).
(2) The extended redemption period in paragraph (c)(1) of this
section applies to all redemption requests that are outstanding at the
time the 10 percent threshold is met as well as any subsequent
redemption requests.
(3) A permitted payment stablecoin issuer may only redeem any of
the outstanding or subsequent redemption requests described in
paragraph (c)(2) of this section 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.
(4) A permitted payment stablecoin issuer must provide notice to
the OCC through its supervisory office within 24 hours if its
redemption requests exceed 10 percent of its outstanding issuance value
in a single 24-hour period.
(5) The OCC may also, in its discretion, extend timely redemption
described in paragraph (b)(1) or (c)(1) of this section, 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.
(d) Disclosures and fees associated with purchase and redemption. A
permitted payment stablecoin issuer must:
(1) Publicly, clearly, and conspicuously disclose in plain language
and in a 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 required under Sec.
15.11(e); and
(iv) All fees associated with purchasing or redeeming payment
stablecoins.
(2) Update the disclosures in paragraph (d)(1)(iv) of this section
if there are any changes in fees associated with purchasing or
redeeming payment stablecoins and provide customers at least seven
calendar days' prior notice of the change, including by securely
delivering the notice to current customers;
(3) Publish the disclosures in paragraph (d)(1) of this section and
any updates made in accordance with paragraph (d)(2) of this section on
the permitted payment stablecoin issuer's website; and
(4) Include the disclosures in paragraph (d)(1) of this section and
any updates made in accordance with paragraph (d)(2) of this section in
any customer agreements that it provides.
Sec. 15.13 Risk management.
(a) General operational and managerial standards--(1) Internal
controls and information systems. A permitted payment stablecoin issuer
must have internal controls and information systems to support
effective risk management 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 the reports required under this
part;
(iv) Adequate procedures to monitor, safeguard, manage, control,
and monetize assets, including reserve assets; and
(v) Compliance with applicable laws and regulations.
(2) Internal audit system. A permitted payment stablecoin issuer
must 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 permitted payment stablecoin issuer's audit
committee or board of directors of the effectiveness of the internal
audit systems.
(3) Interest rate exposure. A permitted payment stablecoin issuer
must:
(i) Manage interest rate risk in a manner that is appropriate to
the size and complexity of the permitted payment stablecoin issuer and
the
[[Page 10292]]
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.
(4) Asset growth. A permitted payment stablecoin issuer's asset
growth must be prudent and commensurate with a permitted payment
stablecoin issuer's risk management capabilities, operational capacity,
and staffing.
(5) Earnings. A permitted payment stablecoin issuer must establish
and maintain a 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
required by subpart E of this part.
(6) Insider and affiliate transactions.
(i) A permitted payment stablecoin issuer must ensure that
transactions between the permitted payment stablecoin issuer and
insiders or affiliates:
(A) Are not excessive and do not pose significant risks of material
financial loss;
(B)(1) 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
(2) 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
(C) Are appropriately documented and reviewed by the board of
directors.
(ii) A permitted payment stablecoin issuer must appropriately
monitor and validate compliance with the requirements of paragraph
(a)(6)(i) of this section.
(7) Oversee service provider arrangements. 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 applicable requirements of
this part; and
(iii) As appropriate, monitor its service providers to confirm they
have satisfied their obligations under this section. As part of this
monitoring, permitted payment stablecoin issuers must review audits,
summaries of test results, or other equivalent evaluations of its
service providers.
(8) Liquidity, diversification, and concentration. A permitted
payment stablecoin issuer must:
(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.
(b) Information technology and security--(1) Information technology
and security program. 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.
(2) Board of directors approval. The board of directors or an
appropriate board committee must approve the information technology and
security program described in paragraph (b)(1) of this section and
oversee the development, implementation, and maintenance of the
program, including the appointment of a qualified Information
Technology and Security Officer. Such oversight includes assigning
specific responsibility for program implementation and review of
program-related reports.
(3) Required elements of program. 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.
(4) Security of customer information. 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.
(5) Safe handling of digital assets. 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.
(6) Adjust the program. A permitted payment stablecoin issuer must
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.
(7) Notification of unauthorized access--(i) Notification to
customers. When a permitted payment stablecoin issuer becomes aware of
an incident of unauthorized access to sensitive customer information,
including a customer's private key, the permitted payment stablecoin
issuer must conduct a reasonable investigation to promptly determine
the likelihood that the information has been or will be misused. If the
permitted payment stablecoin issuer determines that misuse of its
information about a customer has occurred or is reasonably possible, it
must notify the affected or possibly affected customer and 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. 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.
(ii) Notification to group of customers. If a permitted payment
stablecoin issuer determines that a group of files has been
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accessed improperly but is unable to identify which specific customers'
information has been accessed and 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.
(8) Information technology resilience. A permitted payment
stablecoin issuer's information technology and security program must
include measures to ensure continuity of operations and recovery of
critical functions in the face of disruptions, including by business
impact analyses, testing of vulnerabilities, and testing with critical
service providers.
Sec. 15.14 Audits, reports, and supervision.
(a) General. 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
paragraph (d) of this section.
(b) Access to books and records. Upon request by the OCC, permitted
payment stablecoin issuers must grant the OCC prompt and complete
access to all officers, directors, employees, agents, and relevant
books, records, or documents of any type.
(c) Location of examinations. The OCC may conduct examinations of
every permitted payment stablecoin issuer subject to its supervision,
as specified in paragraph (a) of this section, either on-site or
remotely.
(d) Extended exam cycle for certain issuers. Notwithstanding
paragraph (a) of this section, the OCC may conduct a full-scope
examination of a permitted payment stablecoin issuer subject to its
supervision at least once during each 18- to 36-month period, as
determined by the OCC in its sole discretion, if the following
conditions are satisfied:
(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 paragraph (m) of
this section, of the permitted payment stablecoin issuer during the
preceding 12-month period in which a full-scope examination would have
been required but for this paragraph (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 Sec. 15.11 and the
reporting requirements of this section.
(e) Authority to conduct more frequent examinations. This section
does not limit the authority of the OCC to examine any permitted
payment stablecoin issuer as frequently as the OCC deems necessary,
including examinations of a limited scope.
(f) Recordkeeping requirements. All permitted payment stablecoin
issuers must maintain a complete set of books and records in English.
(g) Records retention policy. All permitted payment stablecoin
issuers must 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.
(h) Confidential weekly reporting. All permitted payment stablecoin
issuers must submit to the OCC, on a weekly basis, in the manner and
form specified by the OCC, a confidential report containing the
information requested in the form available at www.occ.gov.
(i) Reports of financial condition. All permitted payment
stablecoin issuers must submit to the OCC a quarterly report on the
financial condition of the permitted payment stablecoin issuer,
including, but not limited to, income statement, expenses, balance
sheet, reserves, changes in equity, investments, capital, outstanding
issuance value, and assets under custody, in a standardized format as
prescribed by the OCC within 30 days of the end of the prior quarter.
Forms and instructions are available at www.occ.gov. Each report of
financial condition must contain a declaration by the permitted payment
stablecoin issuer's Chief Financial Officer, or the individual
performing an equivalent function, that the report is true and correct
to the best of their knowledge and belief. The correctness of the
report of financial condition must be attested to by the signatures of
the directors and senior management of the permitted payment stablecoin
issuer other than the officer, or the individual performing an
equivalent function, making such declaration, with the attestation
stating that the report has been examined by them and to the best of
their knowledge and belief is true and correct.
(j) Submission of other reports. All permitted payment stablecoin
issuers must, 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 operational risks;
(3) Compliance of the permitted payment stablecoin issuer and any
subsidiary thereof with the GENIUS Act, and this part; and
(4) Compliance of the permitted payment stablecoin issuer with the
requirements of the Bank Secrecy Act and with laws authorizing the
imposition of sanctions and implemented by the Secretary of the
Treasury.
(k) Ongoing compliance reporting. Not later than 180 days after the
approval of an application, as defined in Sec. 15.30, and on an annual
basis thereafter, a permitted payment stablecoin issuer must submit to
the OCC a certification by its board of directors that the permitted
payment stablecoin issuer has implemented anti-money laundering and
economic sanctions compliance programs that are reasonably designed to
prevent the permitted payment stablecoin issuer from facilitating money
laundering, in particular, facilitating money laundering for cartels
and organizations designated as foreign terrorist organizations under
section 219 of the Immigration and Nationality Act (8 U.S.C. 1189) and
the financing of terrorist activities, consistent with the requirements
of the GENIUS Act.
(l) Audits. A permitted payment stablecoin issuer with more than
$50 billion in outstanding issuance value that is not subject to the
reporting requirements under section 13(a) or 15(d) of the Securities
and Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) must prepare in
accordance with GAAP an annual financial statement that must include
the disclosure of any related party transactions, as defined by GAAP.
(1) A registered public accounting firm must perform an audit of
the financial statements described in this paragraph (l). The audit
must be conducted in accordance with all applicable auditing standards
established by the Public Company Accounting Oversight Board, including
those relating to auditor independence, internal controls, and related
party transactions.
(2) A permitted payment stablecoin issuer required to prepare an
audited annual financial statement under this paragraph (l) must:
(i) Make the audited financial statements publicly available on the
permitted payment stablecoin issuer's website; and
(ii) Submit the audited financial statements annually, within 120
days after the end of its fiscal year, to the OCC.
[[Page 10294]]
(iii) If a permitted payment stablecoin issuer is unable to timely
file all or any portion of the financial statement described in
paragraph (l)(2)(ii) of this section, it must submit a written notice
of late filing to the OCC. The notice must:
(A) Disclose the permitted payment stablecoin issuer's inability to
timely file all, or specified portions, of its annual financial
statement and the reasons therefore in reasonable detail;
(B) Include the date by which the financial statement will be
filed; and
(C) Be filed on or before the deadline for filing the financial
statement.
(m) Changes in control.
(1) A person seeking to acquire control, as those terms are used in
12 CFR 5.50, of a permitted payment stablecoin issuer must follow the
requirements of 12 CFR 5.50 as if the permitted payment stablecoin
issuer were a national bank.
(2) Paragraph (m)(1) of this section does not apply to a
transaction subject to the notice or application provisions under 12
CFR part 5 or Sec. 15.30.
(n) Use of existing reports. In supervising and examining a
permitted payment stablecoin issuer, the OCC will, to the fullest
extent possible, use existing reports and other supervisory
information.
(o) Avoidance of duplication. The OCC will, to the fullest extent
possible, avoid duplication of examination activities, reporting
requirements, and requests for information.
Sec. 15.15 State qualified payment stablecoin issuers.
(a) Scope. This section addresses requirements related to a State
qualified payment stablecoin issuer that is a nonbank entity
transitioning to the OCC's regulatory framework pursuant to section 4
of the GENIUS Act (12 U.S.C. 5903).
(b) Transition to Federal regulatory framework--
(1) Transition requirements. A State qualified payment stablecoin
issuer that is a nonbank entity of a payment stablecoin with an
outstanding issuance value of more than $10 billion must:
(i) Not later than 360 days after reaching such threshold,
transition to the Federal regulatory framework under this part and
comply with the provisions of this part applicable to Federal qualified
payment stablecoin issuers; or
(ii) Beginning on the date the payment stablecoin reaches such
threshold, cease issuing, on a net basis, new payment stablecoins until
the issuer is under the $10 billion outstanding issuance value
threshold.
(2) Initial notice requirement. (i) A State qualified payment
stablecoin issuer that is a nonbank entity with an outstanding issuance
value of more than $10 billion must provide written notification to the
OCC within five calendar days after reaching such threshold.
(ii) The written notification must include the following
information:
(A) The State or States that currently regulate the State qualified
payment stablecoin issuer;
(B) The State qualified payment stablecoin issuer's outstanding
issuance value as of the date of the notice;
(C) The date that the State qualified payment stablecoin issuer
first reached the $10 billion outstanding issuance value threshold; and
(D) An indication of whether and when the State qualified payment
stablecoin issuer ceased issuing, on a net basis, new payment
stablecoins and whether the State qualified payment stablecoin issuer
intends to seek a waiver pursuant to paragraph (d) of this section.
(3) Capital. (i) Within 270 days of reaching the $10 billion
outstanding issuance value threshold, a State qualified payment
stablecoin issuer that is a nonbank entity must submit an analysis of
the issuer's current capital position and anticipated capital needs,
sufficient to ensure ongoing operations, based on its business model
and risk profile.
(ii) The OCC will review the submission required under paragraph
(b)(3)(i) of this section and establish a minimum capital requirement
pursuant to Sec. 15.41(a)(1).
(iii) For purposes of complying with the transition requirements
under paragraph (b)(1)(i) of this section, the issuer must hold minimum
capital as specified under Sec. 15.41(a)(1)(ii) prior to the issuer's
transition date.
(iv) A state qualified payment stablecoin issuer that is a nonbank
entity is not required to submit a capital analysis under this
paragraph (b)(3) if the issuer:
(A) Has received a waiver pursuant to paragraph (d) of this
section; or
(B) Is not required to transition to the Federal regulatory
framework pursuant to paragraph (b)(1)(ii) of this section.
(4) Compliance notice requirement and transition date. (i) For
purposes of complying with paragraph (b)(1)(i) of this section, a State
qualified payment stablecoin issuer that is a nonbank entity must
provide written notification to the OCC that it is in compliance with
the Federal regulatory framework under this part. If the State
qualified payment stablecoin issuer is not in compliance with the
Federal regulatory framework under this part, the written notice must
identify the provisions with which the issuer does not comply, provide
the issuer's plan for remediating its noncompliance, and explain why
the issuer did not comply with the Federal regulatory framework within
the 360-day transition period.
(ii) A State qualified payment stablecoin issuer that does not
cease issuing new payment stablecoins in accordance with paragraph
(b)(1)(ii) of this section must transition to the regulatory framework
under this part on the earlier of 360 days after reaching the $10
billion outstanding issuance value threshold or the date on which the
State qualified payment stablecoin issuer provides written notification
under paragraph (b)(4)(i) of this section.
(c) Initial Examination. A State qualified payment stablecoin
issuer that transitions to the regulatory framework under this part
must undergo an initial OCC examination at the OCC's request or no
later than six months after the date on which the State qualified
payment stablecoin issuer provides written notification under paragraph
(b)(4)(i) of this section.
(d) Waiver from Federal supervision.
(1) Waiver request. A State qualified payment stablecoin issuer
that is a nonbank entity seeking to remain solely supervised by a State
payment stablecoin regulator must submit to the OCC a written waiver
request containing information necessary to evaluate such request under
paragraphs (d)(2) and (3) of this section. A State qualified payment
stablecoin issuer that is a nonbank entity seeking to remain solely
supervised by a State payment stablecoin issuer must submit a waiver
request within 240 days of reaching the $10 billion outstanding
issuance value.
(2) Waiver criteria. The OCC will consider the following exclusive
criteria when deciding whether to grant a waiver:
(i) The capital maintained by the State qualified payment
stablecoin issuer;
(ii) The past operations and examination history of the State
qualified payment stablecoin issuer;
(iii) The experience of the State payment stablecoin regulator in
supervising payment stablecoin and digital asset activities; and
(iv) The supervisory framework, including regulations and guidance,
of the State qualified payment stablecoin issuer with respect to
payment stablecoins and digital assets.
(3) Waiver presumption. (i) Except as provided in paragraph
(d)(3)(ii) of this section, the OCC will approve a waiver
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request under this section if the relevant State payment stablecoin
regulator has:
(A) Established a prudential regulatory regime (including
regulations and guidance) for the supervision of digital assets or
payment stablecoins as of April 19, 2025, that has been certified
pursuant to section 4(c) of the GENIUS Act (12 U.S.C. 5903(c)); and
(B) Approved one or more issuers to issue payment stablecoins under
the supervision of such State payment stablecoin regulator.
(ii) Paragraph (d)(3)(i) of this section does not apply to a waiver
request if the OCC finds by clear and convincing evidence that the
criteria in paragraph (d)(2) of this section are not substantially met
or that the State qualified payment stablecoin issuer poses significant
safety and soundness risks to the financial system of the United
States.
Sec. 15.16 Unusual and exigent circumstances.
(a) Scope. This section addresses the OCC's authority to impose
restrictions on a State qualified payment stablecoin issuer that is a
nonbank entity during unusual and exigent circumstances, pursuant to
section 7 of the GENIUS Act (12 U.S.C. 5906).
(b) Unusual and exigent circumstances. If the OCC determines that
unusual and exigent circumstances exist, based on information available
to the OCC, and that there is reasonable cause to believe that the
continuation of any activity, including failure to act, by a State
qualified payment stablecoin issuer that is a nonbank entity
constitutes a serious risk to the financial safety, soundness, or
stability of the nonbank entity, the OCC will impose such restrictions
as the OCC determines to be necessary to address such risk during
unusual and exigent circumstances in the form of a directive with the
effect of a cease-and-desist order that has become final. Such
restrictions may include limitations on:
(1) Redemptions of payment stablecoins;
(2) Transactions between the State qualified payment stablecoin
issuer, a holding company, and the subsidiaries or affiliates of either
the State qualified payment stablecoin issuer or the holding company;
and
(3) Any activities of the State qualified payment stablecoin issuer
that might create a serious risk that the liabilities of a holding
company and the affiliates of the holding company may be imposed on the
State qualified payment stablecoin issuer.
(c) OCC considerations for unusual and exigent circumstances. When
determining whether unusual and exigent circumstances exist under this
section, the OCC will consider:
(1) Whether the State qualified payment stablecoin issuer is, or is
expected to imminently be, engaging in an activity (including any act,
practice, or omission) that poses an immediate risk to the financial
safety, soundness, or stability of the issuer or the financial system
of the United States;
(2) The actions of the relevant State payment stablecoin regulator
to promptly address the risk to the issuer or the financial system of
the United States;
(3) Risks presented to payment stablecoin holders; and
(4) Any other factors the OCC deems appropriate in light of the
particular circumstances and consistent with the purposes of the GENIUS
Act.
(d) Administrative review. The administrative review procedures
described in section 7(e)(2)(D) of the GENIUS Act (12 U.S.C.
5906(e)(2)(D)) are applicable to a State qualified payment stablecoin
issuer or any institution-affiliated party, as defined in section 2(13)
of the GENIUS Act (12 U.S.C. 5901(13)), subject to a directive issued
under paragraph (b) of this section.
Subpart C--Custody
Sec. 15.20 Definitions.
For the purposes of this subpart, the following definitions apply:
Applicable law means the law of a State or other jurisdiction
governing a covered custodian's custody relationships, any applicable
Federal law governing those relationships, the terms of the custody
agreement, and any applicable court order.
Covered assets means payment stablecoin reserves, payment
stablecoins used as collateral, and private keys used to issue payment
stablecoins, as well as cash and other property received in the course
of the provision of custodial or safekeeping services for such assets.
Covered custodian means a national bank, Federal savings
association, Federal branch, or permitted payment stablecoin issuer to
the extent of such person's provision of custodial or safekeeping
services for covered assets.
Covered customer means a person for or on whose behalf a covered
custodian receives, acquires, or holds covered assets.
Custody agreement means a legally binding contractual agreement
between a covered customer, as the principal, and the covered
custodian, as the agent, that establishes the covered custodian's
duties and responsibilities in providing safekeeping and ancillary
services to the covered customer.
Digital wallet means a software program or hardware device that
stores and manages the private keys associated with a particular unit
of a digital asset.
Sub-custodian means a person that provides custody and safekeeping
services to a covered custodian, including through a digital wallet for
which such person controls the associated private keys, with respect to
covered assets of a covered customer, for which the covered custodian
otherwise serves as a custodian under this subpart.
Sec. 15.21 Covered asset custodial property requirements.
(a) Separate accounting, treatment, and dealing. A covered
custodian must separately account for the covered assets of a covered
customer and must treat and deal with those covered assets as belonging
to such covered customer and not as the property of the covered
custodian.
(b) Protection, possession, and control. (1) A covered custodian
must take appropriate steps to protect the covered assets of covered
customers from the claims of creditors of the covered custodian and any
sub-custodian, as applicable, including through adopting, implementing,
and maintaining written policies, procedures, and internal controls
that are adequate to comply with applicable law and that are
commensurate with the covered custodian's size, complexity, and risk
profile and with the nature of the applicable covered assets for which
it provides custodial or safekeeping services.
(2)(i) A covered custodian must maintain possession or control of
the covered assets of a covered customer that are held directly,
including in a digital wallet for which the covered custodian controls
the associated private keys; however, a covered custodian may maintain
the covered assets of a covered customer through the use of a sub-
custodian if consistent with applicable law, provided the covered
custodian maintains adequate safeguards and internal controls
reasonably designed to provide the covered custodian with oversight of
such sub-custodian's compliance with the requirements of this subpart.
(ii) With regards to any payment stablecoin or stablecoin reserve
in the form of a tokenized asset held in safekeeping under this
subpart, a covered custodian, or sub-custodian, as applicable,
maintains control for purposes of paragraph (b)(2)(i) of this section
if it can reasonably demonstrate,
[[Page 10296]]
consistent with the standard of care established by applicable law,
that no other party, including the covered customer, can transfer the
payment stablecoin or tokenized asset using a distributed ledger
without the consent of the custodian or sub-custodian, as applicable.
(c) Withdrawals and application of covered assets. Consistent with
applicable law, a covered custodian may withdraw and apply such share
of the covered assets of a covered customer necessary to transfer,
adjust, or settle a transaction or transfer of assets applicable to
that covered customer, including the payment of commissions, taxes,
storage, and other charges lawfully accruing in connection with the
provision of services to that covered customer by the covered
custodian.
(d) Holdings of cash. Notwithstanding any other provision of this
section, an insured national bank or Federal savings association that
provides custodial or safekeeping services, including as a sub-
custodian, for covered assets that are in the form of cash may hold
such cash in the form of a deposit liability, provided such treatment
is consistent with Federal law.
Sec. 15.22 Use of omnibus accounts.
(a) Segregation of covered assets. A covered custodian must
segregate all covered assets of covered customers from and not
commingle them with the assets of the covered custodian, except as
permitted under Sec. 15.21(d).
(b) Commingling covered assets. A covered custodian may, for
convenience, commingle the covered assets of multiple covered
customers, in one or more omnibus accounts to the extent that the steps
it has taken pursuant to Sec. 15.21(b) are adequate to maintain safe
and sound practices for the use of omnibus accounts, and to the extent
that the use of omnibus accounts is consistent with applicable law.
Sec. 15.23 Self-custody hardware and software exclusion.
The requirements of this subpart do not apply to any national bank,
Federal savings association, Federal branch, or permitted payment
stablecoin issuer solely on the basis that such entity engages in the
business of providing hardware or software to facilitate a person's or
entity's self-custody of their payment stablecoins or private keys.
Subpart D--Applications and Registrations
Sec. 15.30 Approval of permitted payment stablecoin issuers.
(a) Application requirement--(1) Insured national banks, Federal
savings associations, and insured Federal branches. Any insured
national bank, Federal savings association, or insured Federal branch
that seeks to issue payment stablecoins through a subsidiary must file
an application under this section and receive prior approval from the
OCC before issuing payment stablecoins.
(2) Nonbank entities, uninsured national banks, and uninsured
Federal branches. Any nonbank entity, uninsured national bank, or
uninsured Federal branch that seeks to issue payment stablecoins as a
Federal qualified payment stablecoin issuer must file an application
under this section and receive prior approval from the OCC before
issuing payment stablecoins.
(b) Application process--(1) Information required.
(i) An applicant must submit all the information required by the
form for an application under this section. Forms and instructions are
available at www.occ.gov.
(ii) Each director, executive officer, and principal shareholder of
the applicant (or in the case of an applicant that is an insured
national bank, Federal savings association or Federal branch, of the
subsidiary of the applicant) must submit the information prescribed in
the Interagency Biographical and Financial Report, available at
www.occ.gov.
(iii) An applicant must certify that any filing or supporting
material submitted to the OCC contains no material misrepresentations
or omissions. The OCC may review and verify any information filed in
connection with an application. Any person responsible for any material
misrepresentation or omission in a filing or supporting materials may
be subject to enforcement action and other penalties, including
criminal penalties provided in 18 U.S.C. 1001.
(2) Where to file. An applicant should address an application under
this section to the appropriate OCC licensing office, unless the OCC
advises an applicant otherwise. Relevant addresses are listed on
www.occ.gov.
(3) Substantially complete application.
(i) An application is substantially complete if it contains
sufficient information for the OCC to render a decision on whether the
applicant satisfies the factors set forth in paragraph (c) of this
section.
(ii) The OCC will notify applicants not later than 30 days after
receipt of an application whether the application is substantially
complete. If the application is not substantially complete, the OCC
will notify the applicant of the information required in order for the
application to be substantially complete.
(iii) The OCC will notify applicants not later than 30 days after
receipt of additional information described in paragraph (b)(3)(ii) of
this section whether the application is now substantially complete.
(iv) An application is considered substantially complete as of the
date the OCC receives the information required for the application to
be substantially complete.
(v) If the OCC determines that an application is substantially
complete, the application remains substantially complete unless there
is a material change in circumstances that requires the OCC to treat
the application as a new application.
(4) Investigation. The OCC may examine or investigate and evaluate
facts relating to an application under this section to the extent
necessary to reach an informed decision. The OCC may collect
fingerprints of the individuals listed in paragraph (b)(1)(ii) of this
section for submission to the Federal Bureau of Investigation for a
national criminal history background check.
(5) OCC review. A substantially complete application under this
section is deemed approved by the OCC as of the 120th day after the
substantially complete application is received by the OCC, unless the
OCC denies the substantially complete application under paragraph (d)
of this section.
(c) Review factors.
The OCC considers the following factors when evaluating a
substantially complete application:
(1) The ability of the applicant (or in the case of an applicant
that is an insured national bank, Federal savings association or
insured Federal branch, the subsidiary of the applicant) based on
financial condition and resources, to meet the requirements for issuing
payment stablecoins under subpart B of this part;
(2) Whether any officer or director of the applicant has been
convicted of a felony offense involving insider trading, embezzlement,
cybercrime, money laundering, financing of terrorism, or financial
fraud;
(3) The competence, experience, and integrity of the officers,
directors, and principal shareholders of the applicant, its
subsidiaries, and parent companies, including:
(i) The record of those officers, directors, and principal
shareholders of compliance with laws and regulations; and
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(ii) The ability of those officers, directors, and principal
shareholders to fulfill any commitments or conditions imposed by the
OCC in connection with the application filed under this section or any
prior application; and
(4) Whether the applicant's redemption policy meets the standards
under Sec. 15.12.
(d) Denial. The OCC may deny a substantially complete application
filed under this section if the OCC determines that the proposed
activities would be unsafe or unsound based on the factors described in
paragraph (c) of this section. Within 30 days after the OCC denies a
substantially complete application, the OCC will provide the applicant
with a written explanation of the disapproval, including all findings
with respect to all identified material shortcomings and actionable
recommendations to address the identified material shortcomings.
(e) Appeal.
(1) An applicant may request a written or oral hearing to appeal
the OCC's denial of a substantially complete application within 30 days
of receipt of the OCC's notice of denial. The request for a written or
oral hearing must be in writing.
(2) If the applicant does not make a timely appeal for a hearing
under this section, the OCC will notify the applicant, in writing and
within 10 days of the date the applicant would have been able to
request a hearing, that the denial of the substantially complete
application is the final determination of the OCC.
(3) Within 30 days of receiving a timely appeal request, the OCC
will notify the applicant of a time and place at which the applicant
may appear, personally or through counsel, to submit written materials
or provide oral testimony and oral argument. The applicant must submit
all documents and written arguments that the applicant wishes to be
considered in support of a written appeal.
(4) The Comptroller or authorized delegate considers all
information submitted with the original substantially complete
application, the material before the OCC official who made the initial
denial decision, and any information submitted by the applicant at the
time of appeal. The Comptroller or authorized delegate considers all
submitted documentation de novo. The Comptroller or authorized delegate
may uphold or reverse the initial decision to deny the application.
(5) Within 60 days of the hearing, the Comptroller or authorized
delegate will notify the applicant in writing of a final determination.
The final determination will explain the findings on which the
determination is based. If the initial decision is upheld, the decision
to deny the substantially complete application is effective as of the
date of the original denial.
(6) The denial of a substantially complete application under this
section does not prohibit the applicant from filing a subsequent
application.
(f) Safe harbor--
(1) Insured national banks, Federal savings associations, and
insured Federal branches. An insured national bank, Federal savings
association, or insured Federal branch that has a pending substantially
complete application under this section for a subsidiary to become a
permitted payment stablecoin issuer on or before [effective date of the
GENIUS Act] may request, in writing, that the OCC waive the
requirements of section 4 of the GENIUS Act (12 U.S.C. 5903) with
respect to that subsidiary.
(2) Nonbank entities, uninsured national banks, and uninsured
Federal branches. A nonbank entity, uninsured national bank, or
uninsured Federal branch that has a pending substantially complete
application under this section to become a Federal qualified payment
stablecoin issuer on or before [effective date of the GENIUS Act] may
request, in writing, that the OCC waive the requirements of section 4
of the GENIUS Act (12 U.S.C. 5903) with respect to that entity.
(3) Grant of waiver. The OCC may grant a waiver for a period not to
exceed 12 months beginning on [effective date of the GENIUS Act]. The
OCC may grant the waiver if it finds that the waiver:
(i) Would be in the public interest; or
(ii) Extraordinary circumstances justify the waiver.
(4) Denial notwithstanding waiver. Notwithstanding any waiver
granted under paragraph (f)(3) of this section, the OCC may deny a
substantially complete application under paragraph (d) of this section.
(g) Nullifying a decision--(1) In general. The OCC may nullify the
approval of a substantially complete application under this section if:
(i) The OCC discovers a material misrepresentation or omission in
any information provided to the OCC in the application or supporting
materials;
(ii) The decision is contrary to law or regulation thereunder; or
(iii) The decision was granted due to clerical or administrative
error, or a material mistake of law or fact.
(2) Procedure. When the OCC intends to nullify the approval of a
substantially complete application, the OCC in its sole discretion,
will:
(i) Provide the applicant with notice of the intended nullification
and grant the applicant an opportunity to present a written submission
opposing the intended nullification; or
(ii) Take any other action designed to provide the applicant with
notice and an opportunity to present its views concerning the intended
nullification.
Sec. 15.31 Foreign payment stablecoin issuers.
(a) In general. A foreign payment stablecoin issuer is not subject
to the prohibitions of section 3 of the GENIUS Act (12 U.S.C. 5902) if
it meets all of the following requirements:
(1) The foreign payment stablecoin issuer is subject to regulation
and supervision by a foreign payment stablecoin regulator that has a
regulatory and supervisory regime comparable to the GENIUS Act with
respect to payment stablecoins, as determined by the Secretary of the
Treasury under section 18(b) of the GENIUS Act (12 U.S.C. 5916(b));
(2) The foreign payment stablecoin issuer is registered with the
OCC pursuant to Sec. 15.32;
(3) The foreign payment stablecoin issuer holds reserves in United
States financial institutions sufficient to meet demands of United
States customers, unless otherwise permitted under a reciprocal
arrangement created and implemented by the Secretary of the Treasury
under section 18(d) of the GENIUS Act (12 U.S.C. 5916(d)); and
(4) The foreign country in which the foreign payment stablecoin
issuer is domiciled and regulated is not subject to comprehensive
economic sanctions by the United States or in a jurisdiction that the
Secretary of the Treasury has determined to be a jurisdiction of
primary money laundering concern.
(b) Reporting, supervision, and examination--
(1) In general. A foreign payment stablecoin issuer registered with
the OCC pursuant to Sec. 15.32 must fully accede to any request by the
OCC regarding reporting, supervision, or examination of the foreign
payment stablecoin issuer.
(2) Reporting.
(i) A foreign payment stablecoin issuer registered with the OCC
pursuant to Sec. 15.32 must produce the reports required of a
permitted payment stablecoin issuer under Sec. 15.14 as well as any
other reports the OCC may require.
(ii) A foreign payment stablecoin issuer may request, in writing,
an exemption from any reporting requirement that would otherwise apply
[[Page 10298]]
under Sec. 15.14. The OCC may grant an exemption in its sole
discretion.
(3) Examinations.
(i) The OCC will conduct a full-scope examinations of a foreign
payment stablecoin issuer registered with the OCC under Sec. 15.32 at
the same frequency as the OCC would examine a permitted payment
stablecoin issuer under Sec. 15.14 unless the OCC determines, in its
sole discretion, to examine at a different frequency.
(ii) The OCC may conduct examinations as specified in paragraph
(b)(3)(i) of this section, either on-site or remotely.
(c) Prohibition on interest.
(1) A foreign payment stablecoin issuer registered with the OCC
pursuant to Sec. 15.32 may 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 stablecoins.
(2) The OCC presumes that a foreign payment stablecoin issuer is
paying interest or yield (whether in cash, tokens, or other
consideration) to the holder of a payment stablecoin solely in
connection with the holding, use, or retention of such payment
stablecoin if:
(i) The foreign payment stablecoin issuer has a contract,
agreement, or other arrangement with an affiliate of the issuer or
related third party to pay interest or yield to the affiliate or
related third party;
(ii) The affiliate or related third party identified in paragraph
(c)(2)(i) of this section or, if the person is a related third party,
an 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 payment stablecoin issuer solely in connection with the
holding, use, or retention of such payment stablecoin; and
(iii) To the extent the person, or an affiliate of the person,
identified in paragraph (c)(2)(i) 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 identified in paragraph (c)(2)(ii) of this section
considers the holder of the payment stablecoin to be the holder of a
payment stablecoin issued by the permitted payment stablecoin issuer on
the related third party's behalf or under the related third party's
branding.
(3) For purposes of paragraph (c)(2) of this section, a related
third party means:
(i) A person offering to pay interest or yield to payment
stablecoin holders as a service; and
(ii) Any person that the issuer issues payment stablecoins on the
person's behalf or under the person's branding.
(4) A foreign payment stablecoin issuer may rebut the presumption
in paragraph (c)(2) of this section by submitting written materials
that, in the OCC's judgment, demonstrate that the contract, agreement,
or other arrangement is not prohibited under this paragraph (c) and is
not an attempt to evade the prohibition.
(d) Public availability. The OCC makes publicly available on
www.occ.gov a list of foreign payment stablecoin issuers whose
registrations the OCC has approved.
Sec. 15.32 Registration of foreign payment stablecoin issuers.
(a) Application required. A foreign payment stablecoin issuer that
seeks to be registered with the OCC under section 18(c) of the GENIUS
Act (12 U.S.C. 5916(c)) must file an application under this section.
(b) Application process--
(1) Information required. As part of an application under this
section, an applicant must provide the following information:
(i) All the information required by the form for an application
under this section. Forms and instructions are available at
www.occ.gov;
(ii) Evidence that the Secretary of the Treasury has determined
that the applicant is subject to regulatory and supervisory regime
comparable to the GENIUS Act with respect to payment stablecoins, under
section 18 of the GENIUS Act (12 U.S.C. 5916);
(iii) A certification that the applicant will make available to the
OCC all information that the OCC deems necessary to determine and
enforce compliance with the GENIUS Act;
(iv) The applicant's consent to United States jurisdiction relating
to enforcement of the GENIUS Act and this part; and
(v) Certification that any filing or supporting material submitted
to the OCC contains no material misrepresentations or omissions. The
OCC may review and verify any information filed in connection with an
application. Any person responsible for any material misrepresentation
or omission in a filing or supporting materials may be subject to
enforcement action and other penalties, including criminal penalties
provided in 18 U.S.C. 1001.
(2) Where to file. An applicant should address an application under
this section to the appropriate OCC licensing office, unless the OCC
advises a filer otherwise. Relevant addresses are listed on
www.occ.gov.
(3) Investigation. The OCC may examine or investigate and evaluate
facts relating to an application under this section to the extent
necessary to reach an informed decision.
(4) Registration approval. An application for registration made by
a foreign payment stablecoin issuer that satisfies the requirements in
paragraph (b)(1) of this section is deemed approved by the OCC as of
the 30th day after the OCC received the filing, unless the OCC notifies
the filer in writing that the application for registration has been
rejected.
(c) Review factors. The OCC considers the following factors when
evaluating an application under this section:
(1) The Secretary of the Treasury's determination that the foreign
payment stablecoin issuer is subject to a regulatory and supervisory
regime comparable to the GENIUS Act with respect to payment stablecoins
under section 18 of the GENIUS Act (12 U.S.C. 5916);
(2) The financial and managerial resources of the United States
operations of the foreign payment stablecoin issuer;
(3) Whether the foreign payment stablecoin issuer will provide
adequate information to the OCC to determine compliance with the GENIUS
Act and this part;
(4) Whether the foreign payment stablecoin issuer presents a risk
to the financial stability of the United States, including risks
relating to ensuring timely redemption for United States customers; and
(5) Whether the foreign payment stablecoin issuer presents illicit
finance risks to the United States.
(d) Conditions of approval. Any approval of registration under this
section is subject to the following conditions:
(1) Upon request by the OCC, a foreign payment stablecoin issuers
must grant the OCC prompt and complete access to all officers,
directors, employees, and agents and to all relevant books, records, or
documents of any type, in a form and location accessible to the OCC in
the United States.
(2) The foreign payment stablecoin issuer will make all information
described in paragraph (d)(1) of this section available to the OCC in
English.
(3) The foreign payment stablecoin issuer provides evidence that it
holds reserves in the United States that are sufficient to meet the
liquidity demands
[[Page 10299]]
of United States customers on an ongoing basis, unless otherwise
permitted under a reciprocal arrangement implemented by the Secretary
of the Treasury under section 18(d) of the GENIUS Act (12 U.S.C.
5916(d)).
(i) The reserves must be held at United States financial
institutions.
(ii) The foreign payment stablecoin issuer must provide to the OCC,
by noon on the last day of each month, a report describing the total
number of outstanding payment stablecoins issued by the foreign payment
stablecoin issuer held by United States customers and the amount and
composition of the foreign payment stablecoin issuer's reserves,
including their geographic location and average tenor of reserve
instruments, using a format substantially similar to the template
provided in table 1 to this paragraph.
Table 1 Paragraph (d)(3)(ii)--Monthly Composition Template
------------------------------------------------------------------------
------------------------------------------------------------------------
As of YYYYMMDD Amount Geographic Average
In thousands of U.S. Dollars location tenor
------------------------------------------------------------------------
Number of Outstanding payment stablecoins Held by United States
Customers
------------------------------------------------------------------------
1 \1\......
2..........
3..........
4.......... TOTAL OUTSTANDING
PAYMENT STABLECOINS
HELD BY UNITED STATES
CUSTOMERS.
------------------------------------------------------------------------
Fair Value of Reserve Assets
------------------------------------------------------------------------
5.......... Deposits:
6.......... Insured deposits...
7.......... Uninsured deposits.
8.......... Treasury bills,
Treasury notes, or
Treasury bonds.
9.......... Other similarly liquid
Federal Government-
issued assets
approved by OCC.
10......... Money received under
repurchase agreements.
11......... Reverse repurchase
agreements.
12......... Securities issued by
an investment company
solely invested in
qualifying reserve
assets.
13......... Reserves in tokenized
form \2\.
14......... Total Reserve Assets
\3\.
15......... Outstanding Repurchase
Agreement Liabilities.
16......... Total Reserve Assets
net of Outstanding
Repurchase Agreement
Liabilities.
------------------------------------------------------------------------
\1\ List different classes of stablecoin separately, if applicable. To
the extent that different classes of stablecoins are secured by
distinct pools of reserve assets, foreign payment stablecoin issuers
should publish a composition table for each class of stablecoin and
describe the legal mechanism for how the assets are separately
secured.
\2\ Foreign payment stablecoin issuers must separately list any reserves
in tokenized form by category of reserve asset, using multiple rows if
appropriate.
\3\ Do not double count any reserve assets that may be listed in more
than one row for purposes of computing the total.
(iii) The foreign payment stablecoin must promptly notify the OCC
through its supervisory office on any day in which the issuer fails to
meet the reserve asset requirements of paragraph (d)(3).
(iv) The foreign payment stablecoin issuer will promptly and fully
address any deficiency in its compliance with this paragraph (d)(3)
that is explained to the foreign payment stablecoin issuer in writing
by the OCC, including by depositing additional liquidity in United
Staes financial institutions to the extent doing so would address the
deficiency identified.
(4) The foreign payment stablecoin issuer consents to the
jurisdiction of the Federal courts of the United States and of all
United States Government agencies, departments and divisions for
purposes of any and all claims made by, proceedings initiated by, or
obligations to, the United States, the OCC and any other United States
Government agency, department or division, in any matter arising under
the GENIUS Act and other applicable Federal laws.
(5) The foreign payment stablecoin issuer will comply with all
understandings, commitments, or conditions contained in any
determination by the Secretary of the Treasury or any arrangements
entered into by the United States and the foreign jurisdiction under
section 18 of the GENIUS Act (12 U.S.C. 5916).
(e) Rejection. The OCC may reject an application under this section
if the OCC makes a negative finding with respect to any of the factors
described in paragraph (c) of this section or if the OCC determines
that the applicant would be unable to comply with the conditions in
paragraph (d) of this section. The OCC will provide written notice to
the applicant of any rejection under this paragraph (e).
(f) Appeal of rejection. A foreign payment stablecoin issuer may
request a written or oral hearing to appeal the OCC's rejection of an
application for registration within 30 days of receipt of the OCC's
notice of rejection. The request for a written or oral hearing must be
in writing.
(1) If the foreign payment stablecoin issuer does not make a timely
appeal for a hearing under this section, the OCC will notify the
applicant, in writing and within 10 days of the date the applicant
would have been able to request a hearing, that the denial of the
application is the final determination of the OCC.
(2) Within 30 days of receiving a timely appeal request, the OCC
notify the applicant of a time and place at which the applicant may
appear, personally or through counsel, to submit written materials or
provide oral testimony and oral argument. The foreign payment
stablecoin issuer must submit all documents and written arguments that
the foreign payment stablecoin issuer wishes to be considered in
support of a written appeal.
(3) The Comptroller or authorized delegate considers all
information submitted with the original application for registration,
the material before the OCC official who made the initial decision, and
any information
[[Page 10300]]
submitted by the appellant at the time of appeal. The Comptroller or
authorized delegate considers all submitted documentation de novo. The
Comptroller or authorized delegate may uphold or reverse the initial
decision to reject the registration.
(4) Within 60 days of the hearing, the Comptroller or authorized
delegate will notify the foreign payment stablecoin issuer in writing
of a final determination. The final determination will explain the
findings on which the determination is based. If the initial decision
is upheld, the decision to deny the application is effective as of the
date of the original denial.
(5) The denial of an application under this section does not
prohibit the applicant from filing a subsequent application.
(g) Nullifying a decision--(1) In general. The OCC may nullify the
approval of a registration under this section if:
(i) The OCC discovers a material misrepresentation or omission in
any information provided to the OCC in the application or supporting
materials;
(ii) The decision is contrary to law or regulation thereunder; or
(iii) The decision was granted due to clerical or administrative
error, or a material mistake of law or fact.
(2) Procedure. When the OCC intends to nullify the approval of a
registration, the OCC in its sole discretion, will:
(i) Provide the applicant with notice of the intended nullification
decision and grant the applicant an opportunity to present a written
submission opposing the intended nullification; or
(ii) Take any other action designed to provide the applicant with
notice and an opportunity to present its views concerning the intended
nullification.
Sec. 15.33 Revocation or rescission of approval.
(a) Revocation of approval of a permitted payment stablecoin
issuer--(1) In general. The OCC may revoke approval of a permitted
payment stablecoin issuer's application under Sec. 15.30 if the
permitted payment stablecoin issuer does not submit the certification
required by Sec. 15.14(k).
(2) Procedures--(i) Notice and hearing. Except as otherwise
provided in this section, the OCC may issue an order to revoke the
permitted payment stablecoin issuer's application approval under Sec.
15.30 after providing notice to the permitted payment stablecoin issuer
and after providing an opportunity for a hearing.
(ii) Procedures for hearing. The OCC will conduct a hearing under
this section pursuant to the OCC's Rules of Practice and Procedures in
12 CFR part 19.
(iii) Expedited procedure. The OCC may act without providing an
opportunity for a hearing if it determines that expeditious action is
necessary in order to protect the public interest. When the OCC finds
that it is necessary to act without providing an opportunity for a
hearing, the OCC in its sole discretion, may:
(A) Provide the permitted payment stablecoin issuer with notice of
the intended revocation of application approval;
(B) Grant the permitted payment stablecoin issuer an opportunity to
present a written submission opposing revocation of application
approval; or
(C) Take any other action designed to provide the permitted payment
stablecoin issuer with notice and an opportunity to present its views
concerning the revocation of application approval.
(3) Effect of rescission. A decision to revoke an application
approval is effective upon provision of notice to the permitted payment
stablecoin issuer, unless otherwise specified by the OCC.
(b) Rescission of foreign payment stablecoin issuer registration--
(1) In general. The OCC may, in consultation with the Secretary of the
Treasury, rescind approval of a registration of a foreign payment
stablecoin issuer under Sec. 15.32 if the OCC determines that the
foreign payment stablecoin issuer is not in compliance with the
requirements of the GENIUS Act, including for maintaining insufficient
reserves or posing an illicit finance risk or financial stability risk.
(2) Procedures--(i) Notice and hearing. Except as otherwise
provided in this section, the OCC may issue an order to rescind the
foreign payment stablecoin issuer's registration approval under Sec.
15.32 after providing notice to the foreign payment stablecoin issuer
and providing an opportunity for a hearing.
(ii) Procedures for hearing. The OCC will conduct a hearing under
this section pursuant to the OCC's Rules of Practice and Procedures in
12 CFR part 19.
(iii) Expedited procedure. The OCC may act without providing an
opportunity for a hearing if it determines that expeditious action is
necessary in order to protect the public interest. When the OCC finds
that it is necessary to act without providing an opportunity for a
hearing, the OCC in its sole discretion, may:
(A) Provide the foreign payment stablecoin issuer with notice of
the intended recission of approval registration;
(B) Grant the foreign payment stablecoin issuer an opportunity to
present a written submission opposing recission of approval
registration; or
(C) Take any other action designed to provide the foreign payment
stablecoin issuer with notice and an opportunity to present its views
concerning the recission of approval registration.
(3) Effect of rescission. A decision to rescind approval of a
registration is effective upon publication in the Federal Register,
unless otherwise specified by the OCC.
Subpart E--Capital and Operational Backstop
Sec. 15.40 Capital elements.
(a) Capital elements. The minimum capital requirement must consist
of common equity tier 1 capital and additional tier 1 capital.
(b) Common equity tier 1 capital. Common equity tier 1 capital is
the sum of the common equity tier 1 capital elements in this paragraph
(b). The common equity tier 1 capital elements are:
(1) Any common stock instruments (plus any related surplus) issued
by the permitted payment stablecoin issuer, net of treasury stock, that
meet all the following criteria:
(i) The instrument is paid-in, issued directly by the permitted
payment stablecoin issuer, and represents the most subordinated claim
in a receivership, insolvency, liquidation, or similar proceeding of
the permitted payment stablecoin issuer;
(ii) The holder of the instrument is entitled to a claim on the
residual assets of the permitted payment stablecoin issuer that is
proportional with the holder's share of the permitted payment
stablecoin issuer's issued capital after all senior claims have been
satisfied in a receivership, insolvency, liquidation, or similar
proceeding;
(iii) The instrument has no maturity date, can only be redeemed via
discretionary repurchases with the prior approval of the OCC, and does
not contain any term or feature that creates an incentive to redeem;
(iv) The permitted payment stablecoin issuer did not create at
issuance of the instrument through any action or communication an
expectation that it will buy back, cancel, or redeem the instrument,
and the instrument does not include any term or feature that might give
rise to such an expectation;
(v) Any cash dividend payments on the instrument are paid out of
the permitted payment stablecoin issuer's
[[Page 10301]]
net income or retained earnings and are not subject to a limit imposed
by the contractual terms governing the instrument;
(vi) The permitted payment stablecoin issuer has full discretion at
all times to refrain from paying any dividends and making any other
distributions on the instrument without triggering an event of default,
a requirement to make a payment-in-kind, or an imposition of any other
restrictions on the permitted payment stablecoin issuer;
(vii) Dividend payments and any other distributions on the
instrument may be paid only after all legal and contractual obligations
of the permitted payment stablecoin issuer have been satisfied,
including payments due on more senior claims;
(viii) The holders of the instrument bear losses as they occur
equally, proportionately, and simultaneously with the holders of all
other common stock instruments before any losses are borne by holders
of claims on the permitted payment stablecoin issuer with greater
priority in a receivership, insolvency, liquidation, or similar
proceeding;
(ix) The paid-in amount is classified as equity under GAAP;
(x) The permitted payment stablecoin issuer, or an entity that the
permitted payment stablecoin issuer controls, did not purchase or
directly or indirectly fund the purchase of the instrument;
(xi) The instrument is not secured, not covered by a guarantee of
the permitted payment stablecoin issuer or of an affiliate, and is not
subject to any other arrangement that legally or economically enhances
the seniority of the instrument;
(xii) The instrument has been issued in accordance with applicable
laws and regulations; and
(xiii) The instrument is reported on the permitted payment
stablecoin issuer's financial statements separately from other capital
instruments.
(2) Retained earnings.
(3) Accumulated other comprehensive income (AOCI) as reported under
GAAP.
(4) Notwithstanding the criteria for common stock instruments
referenced in paragraph (b)(1) of this section, common stock issued by
the permitted payment stablecoin issuer and held in trust for the
benefit of its employees as part of an employee stock ownership plan
does not violate any of the criteria in paragraph (b)(1)(iii), (iv), or
(xi) of this section, provided that any repurchase of the stock is
required solely by virtue of the Employee Retirement Income Security
Act of 1974 (ERISA) for an instrument of a permitted payment stablecoin
issuer that is not publicly-traded. In addition, an instrument issued
by a permitted payment stablecoin issuer to its employee stock
ownership plan does not violate the criterion in paragraph (b)(1)(x) of
this section.
(c) Additional tier 1 capital. Additional tier 1 capital is the sum
of additional tier 1 capital elements and any related surplus.
Additional tier 1 capital elements are:
(1) Instruments (plus any related surplus) that meet the following
criteria:
(i) The instrument is issued and paid-in;
(ii) The instrument is subordinated to payment stablecoin holders,
general creditors, and subordinated debt holders of the permitted
payment stablecoin issuer in a receivership, insolvency, liquidation,
or similar proceeding;
(iii) The instrument is not secured, not covered by a guarantee of
the permitted payment stablecoin issuer or of an affiliate, and not
subject to any other arrangement that legally or economically enhances
the seniority of the instrument;
(iv) The instrument has no maturity date and does not contain a
dividend step-up or any other term or feature that creates an incentive
to redeem;
(v) If callable by its terms, the instrument may be called by the
permitted payment stablecoin issuer only after a minimum of five years
following issuance, except that the terms of the instrument may allow
it to be called earlier than five years upon the occurrence of a
regulatory event that precludes the instrument from being included in
additional tier 1 capital or a tax event that impacts the taxation of
the instrument. In addition:
(A) The permitted payment stablecoin issuer must receive prior
approval from the OCC to exercise a call option on the instrument;
(B) The permitted payment stablecoin issuer does not create at
issuance of the instrument, through any action or communication, an
expectation that the call option will be exercised; and
(C) Prior to or simultaneously with exercising the call option, the
permitted payment stablecoin issuer must either replace the instrument
to be called with an equal amount of common equity tier 1 or additional
tier 1 instruments or demonstrate to the satisfaction of the OCC that
following redemption, the permitted payment stablecoin issuer will
continue to hold capital commensurate with its risk;
(vi) Redemption or repurchase of the instrument requires prior
approval from the OCC;
(vii) The permitted payment stablecoin issuer has full discretion
at all times to cancel dividends or other distributions on the
instrument without triggering an event of default, a requirement to
make a payment-in-kind, or an imposition of other restrictions on the
permitted payment stablecoin issuer except in relation to any
distributions to holders of common stock or instruments that are pari
passu with the instrument;
(viii) Any cash dividend payments on the instrument are paid out of
the permitted payment stablecoin issuer's net income or retained
earnings;
(ix) The instrument does not have a credit-sensitive feature, such
as a dividend rate that is reset periodically based in whole or in part
on the permitted payment stablecoin issuer's credit quality, but may
have a dividend rate that is adjusted periodically independent of the
permitted payment stablecoin issuer's credit quality, in relation to
general market interest rates or similar adjustments;
(x) The paid-in amount is classified as equity under GAAP;
(xi) The permitted payment stablecoin issuer, or an entity that the
permitted payment stablecoin issuer controls, did not purchase or
directly or indirectly fund the purchase of the instrument; and
(xii) The instrument does not have any features that would limit or
discourage additional issuance of capital by the permitted payment
stablecoin issuer, such as provisions that require the permitted
payment stablecoin issuer to compensate holders of the instrument if a
new instrument is issued at a lower price during a specified time
frame.
(2) [Reserved]
Sec. 15.41 Minimum capital and backstop.
(a) Minimum capital requirement. A permitted payment stablecoin
issuer must hold minimum capital as follows:
(1) De novo capital requirement.
(i) A de novo permitted payment stablecoin issuer must hold minimum
capital equal to the greater of:
(A) For:
(1) A Federal qualified payment stablecoin issuer approved by the
OCC, the amount specified as part of its licensing or chartering
conditions; or
(2) A State qualified payment stablecoin issuer, the amount as
specified under Sec. 15.15(b)(3)(ii); or
(B) $5 million.
(ii) A de novo permitted payment stablecoin issuer means a
permitted payment stablecoin issuer that has received OCC approval to
issue a payment stablecoin under this part within the prior 3 years or
a State
[[Page 10302]]
qualified payment stablecoin issuer that has transitioned to the
Federal regulatory framework under this part within the prior 3 years
and has not received a waiver under Sec. 15.15.
(iii) A de novo permitted payment stablecoin issuer must hold this
minimum amount for 36 months, or for a shorter or longer period as
specified as part of its chartering conditions or as subsequently
determined by the OCC based on the experience of the permitted payment
stablecoin issuer.
(2) Ongoing capital requirement.
(i) A permitted payment stablecoin issuer must maintain capital
commensurate with the level and nature of all risks to which the
permitted payment stablecoin issuer is exposed, including risks for
off-balance sheet activities.
(ii) A permitted payment stablecoin issuer must have a process for
assessing its overall capital adequacy in relation to its business
model and risk profile and a comprehensive strategy for sustaining an
appropriate level of capital to maintain ongoing operations.
(b) Operational backstop. A permitted payment stablecoin issuer
must maintain assets:
(1) Equal to 12 months of total expenses.
(i) In the case of a permitted payment stablecoin issuer that has
provided quarterly reports under Sec. 15.14 for one year or more, the
permitted payment stablecoin issuer must calculate the amount required
under this paragraph (b)(1) using the quarterly expenses reported in
the current quarterly report and the three immediately preceding
reports.
(ii) For each calendar quarter in the preceding 12 months for which
the permitted payment stablecoin issuer has not filed a quarterly
report required under Sec. 15.14 the permitted payment stablecoin
issuer must calculate its expenses using:
(A) Actual expenses, in the case of a permitted payment stablecoin
issuer that was in operation during a calendar quarter in which it did
not file a quarterly report under Sec. 15.14; or
(B) Reasonably determined expenses, which may include annualizing
expenses from other quarters, in the case of any other payment
stablecoin issuer.
(2) Consisting of:
(i) United States coins and currency (including Federal Reserve
notes) or money standing to the credit of an account with a Federal
Reserve Bank;
(ii) Demand deposits or insured shares at a U.S. insured depository
institution, the balances of which are fully insured by the FDIC or the
National Credit Union Administration; and
(iii) U.S. Treasury bills, notes, or bonds with a remaining
maturity of 93 days or less, or issued with a maturity of 93 days or
less; and
(3) Separately identified from any reserve assets required under
Sec. 15.11 or other assets of the permitted payment stablecoin issuer
on the reports filed under Sec. 15.l4.
(c) Failure to meet minimum capital or backstop requirements.
(1) A permitted payment stablecoin issuer must comply with its
minimum capital and backstop requirements at the end of each quarter
based on the amounts reported in the most recent report required under
Sec. 15.14.
(2) A permitted payment stablecoin issuer that fails to satisfy its
minimum capital or backstop requirement at the end of a quarter is
prohibited from issuing any new payment stablecoins, 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 starting on the first day of the
following month and until such time as it satisfies its minimum capital
and backstop requirements.
(3) If a permitted payment stablecoin issuer fails to meet its
minimum capital or backstop requirements at the end of two consecutive
quarters, it must:
(i) Begin liquidation of reserve assets and redemption of
outstanding payment stablecoins, consistent with Sec. 15.12;
(ii) Not charge customers a fee to redeem their payment
stablecoins; and
(iii) Not issue any new stablecoins going forward.
(d) Uninsured national trust bank minimum capital requirement.
(1) An uninsured national trust bank, whether or not it is a
permitted payment stablecoin issuer, may elect to comply with the
minimum capital requirement in paragraph (a) of this section and
backstop requirement in paragraph (b) of this section in lieu of
complying with the minimum capital and leverage requirements in 12 CFR
part 3.
(2) To make the election described in paragraph (d)(1) of this
section, or rescind a prior election, an uninsured national trust bank
must submit a notice to the appropriate OCC supervisory office. The
election becomes effective 30 days after OCC receipt, unless the OCC
provides a written objection based on good cause within that timeframe.
(3) Notwithstanding paragraph (d)(1) of this section, an uninsured
national trust bank must:
(i) Comply with any OCC enforcement action, order, directive, or
document that specifies an otherwise applicable minimum capital
requirement; and
(ii) Continue to follow the definition of capital in 12 CFR part 3,
subpart C, including any adjustments or deductions, but cannot include
any Tier 2 capital instrument as described in 12 CFR 3.20(d).
Sec. 15.42 Individual additional capital or backstop requirement.
(a) Applicability. The OCC may require an additional capital or
backstop requirement for an individual permitted payment stablecoin
issuer in view of its circumstances. For example, an additional capital
or backstop requirement may be appropriate for:
(1) Failure of management to assess an appropriate capital
requirement to support ongoing operations consistent with the permitted
payment stablecoin issuer's business model and risk profile;
(2) A permitted payment stablecoin issuer that has, or is expected
to have, losses resulting in capital inadequacy;
(3) A permitted payment stablecoin issuer with significant exposure
due to management's overall inability to monitor and control financial
and operating risks;
(4) A permitted payment stablecoin issuer that is experiencing
significant volatility in stablecoin issuance or redemption;
(5) A permitted payment stablecoin issuer with significant exposure
due to fiduciary or operational risk;
(6) A permitted payment stablecoin issuer's significant off-balance
sheet activities; or
(7) A permitted payment stablecoin issuer that may be adversely
affected by the activities or condition of its affiliate(s), or other
persons or institutions, with which it has significant business
relationships.
(b) Standards for determination. The factors to be considered in
the determination will vary in each case and may include, for example:
(1) The conditions or circumstances leading to the OCC's
determination that an additional capital or backstop requirement is
appropriate or necessary for the permitted payment stablecoin issuer;
(2) The exigency of those circumstances or potential problems;
(3) The overall condition, management strength, and future
prospects of the permitted payment stablecoin issuer and, if
applicable, its affiliate(s);
(4) The permitted payment stablecoin issuer's liquidity, capital,
and stablecoin reserve assets compared to its peer group; and
(5) The views of the permitted payment stablecoin issuer's owners
and
[[Page 10303]]
senior management in any response provided under paragraph (c)(2) of
this section.
(c) Procedures--
(1) Notice. When the OCC determines that an additional capital or
backstop requirement above that set forth in Sec. 15.41 are necessary
or appropriate for a particular permitted payment stablecoin issuer,
the OCC will notify the permitted payment stablecoin issuer in writing
of the proposed additional capital or backstop requirement and the date
by which the requirement should be reached (if applicable) and will
provide an explanation of why the requirement proposed is considered
necessary or appropriate for the permitted payment stablecoin issuer.
(2) Response.
(i) (A) The permitted payment stablecoin issuer may respond to the
OCC in writing to the notice. (B) The response should include any
matters which the permitted payment stablecoin issuer would have the
OCC consider in deciding whether an individual additional capital or
backstop requirement should be established for the permitted payment
stablecoin issuer, what the capital or backstop requirement should be,
and, if applicable, when it should be achieved.
(C) Any response must be delivered to the designated OCC official
within 30 days after the date on which the permitted payment stablecoin
issuer received the notice or such other time period as the OCC
determines appropriate based on the condition of the permitted payment
stablecoin issuer.
(ii) Failure to respond within the time period specified by the OCC
constitutes a waiver of any objections to the proposed individual
additional capital or backstop requirement or the deadline for its
achievement.
(3) Decision. After the close of the permitted payment stablecoin
issuer's response period, the OCC will decide, based on a review of the
permitted payment stablecoin issuer's response and other information
concerning the permitted payment stablecoin issuer, whether the
individual additional capital or backstop requirement should be
established for the permitted payment stablecoin issuer and, if so, the
requirement and the date the requirement will become effective. The
permitted payment stablecoin issuer will be notified of the decision in
writing. The notice will include an explanation of the decision, except
for a decision not to establish an individual additional capital or
backstop requirement for the permitted payment stablecoin issuer.
(4) Submission of plan. The decision may require the permitted
payment stablecoin issuer to develop and submit to the OCC, within a
time period specified, an acceptable plan to reach the additional
capital or backstop requirement established for the permitted payment
stablecoin issuer by the date required.
(5) Change in circumstances. If, after the OCC's decision in
paragraph (c)(3) of this section, there is a significant change in the
circumstances that materially affects the permitted payment stablecoin
issuer's capital adequacy or its ability to reach the required
additional capital or backstop requirement by the specified date, the
permitted payment stablecoin issuer may request, or the OCC may propose
to the permitted payment stablecoin issuer, a change in the additional
capital or backstop requirement for the permitted payment stablecoin
issuer, the date when the minimum must be achieved, or the permitted
payment stablecoin issuer's plan (if applicable). Pending a decision on
reconsideration, the OCC's original decision and any plan required
under that decision continues in full force and effect.
PART 19--RULES OF PRACTICE AND PROCEDURE
0
13. The authority citation for part 19 is revised to read as follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93, 93a, 161, 164,
481, 504, 1462a, 1463(a), 1464; 1467(d), 1467a(r), 1817(j), 1818,
1820, 1831m, 1831o, 1832, 1884, 1972, 3102, 3108, 3110, 3349, 3909,
4717, 5412(b)(2)(B), and 5913; 15 U.S.C. 78l, 78o-4, 78o-5, 78q-1,
78s, 78u, 78u-2, 78u-3, 78w, and 1639e; 28 U.S.C. 2461; 31 U.S.C.
330 and 5321; and 42 U.S.C. 4012a.
0
14. Amend Sec. 19.1 by revising paragraph (h) and adding paragraph (i)
to read as follows:
Sec. 19.1 Scope.
* * * * *
(h) Suspension or revocation of registration, cease-and-desist,
temporary cease-and-desist, removal and prohibition proceedings, or
civil money penalties under section 6 of the Guiding and Establishing
National Innovation for U.S. Stablecoins Act (``GENIUS Act'') (12
U.S.C. 5905); and
(i) This subpart also applies to all other adjudications required
by statute to be determined on the record after opportunity for an
agency hearing, unless otherwise specifically provided for in the Local
Rules (see Sec. 19.3(j)).
0
15. Amend Sec. 19.3 by revising paragraphs (h) and (i) to read as
follows:
Sec. 19.3 Definitions.
* * * * *
(h) Institution includes any national bank, Federal savings
association, Federal branch or agency of a foreign bank, or a permitted
payment stablecoin issuer as that term is defined in 12 CFR 15.2.
(i) Institution-affiliated party means any institution-affiliated
party as that term is defined in section 3(u) of the FDICA (12 U.S.C.
1813(u)). For actions pursuant to the GENIUS Act, institution-
affiliated party means any institution-affiliated party as that term is
defined in section 2(13) of the GENIUS Act (12 U.S.C. 5901(13)).
* * * * *
0
16. Revise Sec. 19.180 to read as follows:
Sec. 19.180 Scope.
This subpart and Sec. 19.8 apply to formal investigations
initiated by order of the Comptroller and pertain to the exercise of
powers specified in section 5240 of the Revised Statutes of the United
States (12 U.S.C. 481); section 5(d)(1)(B) of the Home Owners' Loan Act
(12 U.S.C. 1464(d)(1)(B)); sections 7(j)(15), 8(n), and 10(c) of the
FDIA (12 U.S.C. 1817(j)(15), 1818(n), and 1820(c)); sections 4(b) and
13(a) and (b) of the International Banking Act of 1978 (12 U.S.C.
3102(b) and 3108(a) and (b)); section 21 of the Exchange Act (15 U.S.C.
78u); and section 6 of the GENIUS Act (12 U.S.C. 5905). This subpart
does not restrict or in any way affect the authority of the Comptroller
to conduct examinations into the affairs or ownership of national
banks; Federal savings associations; Federal branches and agencies;
permitted payment stablecoin issuers, as defined in 12 CFR 5.2; and
their affiliates.
Jonathan V. Gould,
Comptroller of the Currency.
[FR Doc. 2026-04089 Filed 2-27-26; 8:45 am]
BILLING CODE 4810-33-P