On February 25, 2026, the Office of the Comptroller of the Currency (OCC) issued a Notice of Proposed Rulemaking (the Proposal) to implement the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act)12 U.S.C. 5901 et seq. for institutions subject to its jurisdiction.
The GENIUS Act was enacted on July 18, 2025, and establishes a comprehensive regulatory framework for payment stablecoinThe GENIUS Act defines a “payment stablecoin” as 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 it for a fixed amount of monetary value, not including a digital asset denominated in a fixed amount of monetary value; or (b) represents that such issuer will maintain, or create the reasonable expectation that it will maintain, a stable value for it 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 (i.e., a Central Bank Digital Currency or CBDC); (ii) a deposit as defined in the Federal Deposit Insurance Act (including a deposit recorded using distributed ledger technology, e.g., a “tokenized” deposit); or (iii) a security as defined in the Securities Act of 1933, the Securities Exchange Act of 1934 (the Exchange Act), or Investment Company Act of 1940. activities in the US. It prohibits any person other than a permitted payment stablecoin issuer from issuing a payment stablecoin in the US. Digital asset service providers may not offer or sell a payment stablecoin to a person in the US unless the payment stablecoin is issued by a permitted payment stablecoin issuer (with an exception for payment stablecoins issued by certain compliant foreign payment stablecoin issuers) (see this Latham Client Alert).
The Proposal would impose comprehensive requirements governing stablecoin issuance, reserves, redemption rights, custody arrangements, and supervisory authority. The OCC’s Proposal follows the Treasury Department’s September 2025 proposal (see this Latham blog post), as well as the FDIC’s December 2025 proposal (see this Latham blog post), each seeking public comment related to their required implementation of the GENIUS Act.
The OCC expects that GENIUS Act implementation will increase the aggregate market capitalization of payment stablecoins in response to increased demand. The OCC noted that private-sector forecasts project that payment stablecoin issuance could reach $500 billion in 2026.
Under the GENIUS Act, the OCC’s jurisdiction extends to the following categories of payment stablecoin issuers:
The Proposal establishes four principal permitted activities for OCC-regulated stablecoin issuers:
The Proposal permits activities that “directly support” any of the foregoing activities, such as holding non-payment stablecoin cryptoassets as principal when necessary for testing a distributed ledger. In addition, the Proposal allows assessing fees associated with purchasing or redeeming payment stablecoins, holding and transacting in payment stablecoins as principal or agent, and paying gas, network, or other transition fees to facilitate customer transactions. Finally, the Proposal clarifies that insured depository institution subsidiaries and national trust banks that are authorized to issue payment stablecoins may continue to engage in all activities permitted by federal banking law (e.g., custody).
Consistent with the GENIUS Act, the Proposal prohibits permitted payment stablecoin issuers from engaging in certain activities:
The Proposal prohibits permitted payment stablecoin issuers from paying any form of interest or yield to payment stablecoin holders solely in connection with the holding, use,The Proposal does not define the term “use.” The absence of a definition may create interpretive uncertainty, particularly regarding whether transaction-based rewards, promotional incentives, or activities such as staking or deploying stablecoins in decentralized finance protocols constitute “use” for purposes of the prohibition. The OCC has requested comment on whether the prohibition is sufficiently clear or if it can be clarified. or retention of the stablecoin. To address the concern that “issuers could attempt to make prohibited payments of interest or yield to payment stablecoin holders through arrangements with third parties,” the Proposal establishes a rebuttable presumption that certain arrangements with affiliates or related third parties violate this prohibition.According to the Proposal, arrangements that are not explicitly captured by the rebuttable presumption would be evaluated by the OCC on a case-by-case basis to assess potential violations.
The OCC would presume that a permitted payment stablecoin issuer is paying the holder of a payment stablecoin prohibited interest or yield (whether in cash, tokens, or other consideration) if (i) the issuer has a contract, agreement, or other arrangement to pay interest or yield to the affiliate or related third party solely in connection with the holding, use, or retention of such payment stablecoin; and (ii) the affiliate or related third party (or affiliate of the related third party) has a contract, agreement, or other arrangement to pay interest or yield 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.
An “affiliate” would be defined as a person controlling, controlled by, or under common control with a permitted stablecoin issuer, under a “control” analysis that the OCC stated would generally follow the Federal Reserve Board’s interpretation of the Bank Holding Company Act’s definition of control. A person would be a “related third party” if (i) it is paying interest or yield as a service (i.e., on behalf of the permitted payment stablecoin issuer), or (ii) the issuer is issuing the permitted payment stablecoin under its branding.
Issuers would be afforded the opportunity to rebut this presumption by submitting written materials demonstrating to the OCC that the contract, agreement, or other arrangement is not prohibited and is not an attempt to evade the prohibition.
Issuers may not pledge, rehypothecate, or reuse reserve assets, either directly or indirectly (e.g., through a third-party custodian of the reserve assets), subject to limited exceptions such as satisfying margin obligations in connection with investments in certain permitted assets.
Issuers may not commingle reserve assets with their own proprietary assets, and custodians may not commingle reserves held on behalf of a permitted payment stablecoin issuer with assets of the custodian. These restrictions would not, however, prevent a custodian from, “for convenience,” commingling assets of multiple covered customers in one or more omnibus accounts.
Issuers would also be prohibited from representing or implying that payment stablecoins are backed by the full faith and credit of the US, guaranteed by the US government, or subject to federal deposit insurance.
Permitted payment stablecoin issuers would be required to maintain identifiable reserve assets backing outstanding stablecoins “on an at least one-to-one basis.” The reserves must comprise exclusively high-quality, liquid assets,Permissible reserve assets would include US coins and currency, Federal Reserve account balances, demand deposits or insured shares at insured depository institutions, Treasury bills with 93 days or less remaining maturity, certain short-term repurchase and reverse repurchase agreements backed by Treasuries, money market funds invested solely in qualifying assets, other similarly liquid Federal Government-issued assets approved by the OCC, and tokenized forms of the foregoing. and the fair value of the assets would always be required to equal or exceed the outstanding par value of the related payment stablecoins outstanding. The reserve assets may be held directly or at a custodian eligible under the GENIUS Act.
Issuers must also demonstrate operational capability to access and monetize reserve assets. For certain permitted payment stablecoin issuers, the OCC expects this may require maintaining multiple alternative methods of monetization, such as multiple repurchase agreement lines or arrangements allowing outright sales of Treasury securities. Issuers may need to periodically conduct test or actual monetization transactions to demonstrate this capability.
As protection against the risk that a permitted payment stablecoin issuer would be unable to meet redemption requests in a timely manner, the OCC is proposing two alternative approaches to the GENIUS Act’s reserve diversification and concentration requirements:
Large issuers with $25 billion or more in outstanding issuance would be required to maintain on each business day at least 0.5% of reserve assets, up to a cap of $500 million, in the form of insured deposits or insured credit union shares. Reserve assets would be assessed at fair market value. If the fair value of a payment stablecoin decreased in the secondary market (i.e., if the stablecoin depegged), the permitted payment stablecoin issuer would still “be obligated to retain a stock of reserve assets, the fair value of which equals or exceeds the par value of outstanding payment stablecoins.”
The Proposal would require permitted payment stablecoin issuers to redeem payment stablecoins at par within two business days of a valid redemption request, subject to specified exceptions. Permitted payment stablecoin issuers would be required to publicly disclose their redemption policy, including the timeframe for redemption, scenarios under which the redemption period may be extended, clear instructions on how to redeem, and all fees associated with purchasing or redeeming payment stablecoins. Issuers must provide at least seven days’ prior notice of any redemption fee changes. Issuers would be required to redeem payment stablecoins in any number greater than or equal to one payment stablecoin, subject to appropriate customer screening and onboarding. The Proposal does not require issuers to publicly disclose their onboarding requirements.
By noon on the last day of each month, issuers would be required to publish the monthly composition of reserves held as of the last day of the prior month, disclosing the total number of outstanding payment stablecoins and the amount and composition of reserves, including average tenor and geographic location of custody. A registered public accounting firm would be required to examine the information disclosed in the previous month-end report, with the examination report published on the issuer’s website. The CEO and CFO of the permitted payment stablecoin issuer would be required to certify the accuracy of the monthly report, with criminal penalties for falsification.
The OCC is proposing an individualized approach to capital requirements, based on the business model of each stablecoin issuer. Permitted capital would consist of common equity tier 1 capital and additional tier 1 capital, but, as proposed, there would not be a minimum percentage requirement for either of the two forms of permitted capital.
For newly licensed issuers, the OCC would establish the minimum capital requirement as part of the chartering or licensing process, applying during a minimum three-year de novo period. This approach is consistent with how the OCC evaluates capital requirements for chartering national trust banks. The OCC noted that in its recent approvals for national trust banks proposing to engage in stablecoin issuance, it established required capital amounts ranging from $6.05 million to $25 million. There would, however, be a floor of $5 million for the minimum capital requirement during the de novo period. After the de novo period, permitted payment stablecoin issuers would be required to calculate a minimum capital requirement based on an evaluation of the risks associated with their business model and risk profile.
In addition, and separately, issuers would be required to maintain an operational backstop equal to 12 months of total operating expenses in liquid assets. If an issuer failed to satisfy minimum capital or backstop requirements at any time, it would immediately be prohibited from issuing new stablecoins, except to facilitate transfers between ledgers without increasing net outstanding issuance. If the issuer failed to meet requirements for two consecutive quarters, it would be required to begin liquidating reserve assets and redeeming outstanding stablecoins at the start of the following month and could no longer issue any new stablecoins.
Under the GENIUS Act, 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.”
The Proposal implements this principles-based approach by requiring permitted payment stablecoin issuers to establish and maintain comprehensive risk management systems tailored to their business models and risk profiles. The Proposal incorporates standards modeled on the OCC’s and FDIC’s safety and soundness standards,12 CFR part 30, 12 U.S.C. 1831p-1. including requirements for internal controls and information systems, internal audit systems, interest rate risk management, asset growth management, earnings monitoring, and insider and affiliate transaction controls. The requirements are also consistent with the OCC’s July 2025 joint statement on risk-management considerations for banking organizations engaged in cryptoasset safekeeping (see this Latham blog post).
Issuers must implement a comprehensive written information security risk and control framework. The framework must include an inventory and classification of assets, controls protecting sensitive information, evaluation and validation processes for key systems and smart contracts, periodic independent testing, and incident identification and response programs.
The Proposal also requires permitted payment stablecoin issuers to develop secure handling measures for digital assets, including private key management, backup, and recovery, which incorporate relevant technical, operational, strategic, market, legal, and compliance considerations. Issuers must monitor material developments specifically related to supported digital assets and their underlying ledgers.
Entities seeking to issue payment stablecoins under the GENIUS Act must file an application with the OCC and obtain approval prior to issuing payment stablecoins. This requirement would apply to insured national banks, federal savings associations, and insured federal branches seeking to issue payment stablecoins through a subsidiary, as well as nonbank entities, uninsured national banks, and uninsured federal branches seeking to become federally qualified payment stablecoin issuers. Each director, executive officer, and principal shareholder of the applicant (or, in the case of an insured national bank, federal savings association or federal branch, of the applicant’s subsidiary) must submit the information prescribed in the Interagency Biographical and Financial Report. Applicants must certify that neither the filing nor any supporting material contains material misrepresentations or omissions.
The OCC may examine, investigate, and evaluate facts relating to an application to the extent necessary to reach an informed decision, and may collect fingerprints of directors, executive officers, and principal shareholders for submission to the Federal Bureau of Investigation for a national criminal history background check. In evaluating applications, the OCC may consider a wide range of factors “necessary to ensure the safety and soundness of the permitted payment stablecoin issuer,” including the applicant’s financial condition and resources to meet the requirements for issuing payment stablecoins; whether any officer or director has 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 officers, directors, and principal shareholders; and whether the applicant’s redemption policy meets statutory standards.
The OCC would notify applicants no later than 30 days after receipt of an application whether the application is “substantially complete.”I.e., one that contains sufficient information for the OCC to render a decision based on the factors in Section 5(c) of the GENIUS Act (12 U.S.C. 5904(c)). If not substantially complete, the OCC would notify the applicant of the additional information required. A substantially complete application would be deemed approved as of the 120th day after receipt, unless the OCC denies the application. If the OCC determines that the proposed activities in a substantially complete application would be unsafe or unsound, it may deny the application. The OCC must provide the applicant with a written explanation within 30 days of the denial, “including all findings with respect to all identified material shortcomings and actionable recommendations to address the identified material shortcomings.”
The Proposal provides an appeals process in the event of denial of an application. Within 30 days of receipt of the OCC’s notice, an applicant may make a written request for a written or oral hearing to appeal the denial (if the applicant does not make a timely appeal, the OCC would notify the applicant within 10 days that the denial is final). On appeal, the comptroller or an authorized delegate “considers all submitted documentation de novo,” and would notify the applicant in writing of a final determination within 60 days of the hearing. The OCC’s denial of a substantially complete application would not prohibit the applicant from filing a subsequent application.
Under the GENIUS Act, state-qualified payment stablecoin issuers that are nonbank entities with outstanding issuance exceeding $10 billion must transition to federal oversight. Within 360 days of crossing the threshold, the issuer must transition to the OCC’s regulatory framework or cease issuing new payment stablecoins until its outstanding issuance falls below the $10 billion threshold. The Proposal provides for a waiver process under which the OCC could approve a request by an issuer not to transition to federal oversight.
In addition, the OCC would have enforcement authority over nonbank state-qualified issuers during “unusual and exigent circumstances.” The OCC must determine that unusual and exigent circumstances exist and 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.”
Foreign payment stablecoin issuers are generally prohibited under Section 3 of the GENIUS Act from offering, selling, or otherwise making available a payment stablecoin in the US. However, a foreign payment stablecoin issuer is not subject to this prohibition if it (i) is subject to regulation and supervision by a foreign regulator with a regime comparable to the GENIUS Act, as determined by the Secretary of the Treasury;Neither the GENIUS Act nor the Proposal defines what constitutes a “supervisory regime comparable to the GENIUS Act with respect to payment stablecoins,” other than to say that such a determination is subject to the Secretary of the Treasury’s discretion. In Treasury’s September 19, 2025, Advance Notice of Proposed Rulemaking, seeking public comment related to its implementation of the GENIUS Act, eight questions were posed regarding this topic (see this Latham blog post). (ii) registers with the OCC; (iii) holds reserves in US financial institutions sufficient to meet demands of US customers (unless otherwise permitted under a reciprocal arrangement implemented by the Secretary of the Treasury); and (iv) is not domiciled in a foreign country subject to comprehensive economic sanctions or designated as a jurisdiction of primary money laundering concern.
Foreign payment stablecoin issuers must also provide monthly reports (in English) to the OCC describing the total number of outstanding stablecoins held by US customers and the amount and composition of reserves. They must grant the OCC prompt and complete access to all officers, directors, employees, agents, and relevant books and records in a form and location accessible to the OCC in the US. The OCC may also conduct full-scope examinations of a foreign payment stablecoin issuer registered with the OCC at the same frequency as a US-based permitted payment stablecoin issuer.
The OCC will generally conduct a full-scope examination of every permitted payment stablecoin issuer at least once during each 12-month period. The OCC may examine certain smaller issuers on an 18- to 36-month cycle if they meet specified conditions, including outstanding issuance value of less than $1 billion or total monthly trading volume of less than $25 billion, compliance with all reserve and reporting requirements, and no formal enforcement proceedings.
Permitted payment stablecoin issuers must submit confidential weekly reports to the OCC containing information on issuance and redemption, trading volume, and reserve assets for each payment stablecoin issued. They must also submit quarterly reports on financial condition, including income statement, expenses, balance sheet, reserves, changes in equity, investments, capital, outstanding issuance value, and assets under custody.
Issuers with more than $50 billion in outstanding issuance value that are not subject to reporting requirements under the Exchange Act must prepare audited annual financial statements in accordance with Generally Accepted Accounting Principles (GAAP). A registered public accounting firm must perform the audit in accordance with Public Company Accounting Oversight Board (PCAOB) standards.
The OCC is proposing amendments to its assessment structure12 CFR part 8. to address GENIUS Act-related stablecoin activities. For national banks and federal savings association subsidiaries, the OCC proposes to calculate assessments by applying the existing asset-based formula separately to assets other than minimum stablecoin reserve assets and to minimum stablecoin reserve assets. For minimum stablecoin reserve assets, the OCC would apply the same formula but reduce the resulting amount by 35%, or such other percentage up to 55% as the OCC may deem appropriate, based on its experience supervising stablecoin issuers. The same formula would apply to nonbank federally qualified issuers, foreign issuers, and certain state-qualified issuers.
The discount reflects the OCC’s determination that “the cost of supervising non-custodial GENIUS Act-related activities is likely to be meaningfully lower than the cost of supervising more traditional activities,” and that given statutory restrictions on reserve composition and use, “GENIUS Act-related activities may present lower risks to participating institutions and the federal banking system than certain traditional banking activities.”
The OCC included 211 questions for public comment on all aspects of the Proposal, including:
Comments on the Proposal are due 60 days after publication in the Federal Register. The GENIUS Act becomes effective the earlier of 18 months after enactment (January 18, 2027) or 120 days after the primary federal stablecoin regulators issue final implementing regulations.
The OCC’s Proposal translates the GENIUS Act into operational requirements, establishing a supervisory regime modeled on traditional banking regulation. By requiring full reserve backing in highly liquid federal securities and deposits, mandating extensive disclosures, and imposing capital and liquidity buffers, the framework seeks to prioritize safety and redeemability.
The Proposal’s prohibition on interest payments reflects the policy embedded in the GENIUS Act that payment stablecoins should function as payment substitutes rather than yield-bearing products. Stablecoin advocates have suggested that regulated stablecoin issuers could potentially be safer than traditional banks during high-stress events, given the 100% reserve mandate compared with banks operating on 10% to 20% capital ratios. Banking groupshttps://www.aba.com/advocacy/policy-analysis/letter-to-the-senate-on-the-stablecoin-market. and certain lawmakers,https://www.theblock.co/post/391512/us-lawmakers-revisit-stablecoin-yields-deposit-flight-concerns. however, have warned that third-party yield offerings could trigger deposit flight, though OCC officials have dismissedhttps://finance.yahoo.com/news/occ-chief-plays-down-stablecoin-111415403.html. fears of a sudden crisis, arguing that material deposit flight would not be sudden or unnoticed.