Sometimes, the “simplest” answer just might be supervision. The Office of the Comptroller of the Currency (OCC) this week issued a notice of proposed rulemaking to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act – the first federally established framework governing payment stablecoins, enacted last July. The proposal opens a (very important) 60-day public comment period, and lays out how payment stablecoins would be issued, backed, supervised, and, if necessary, shut down under federal oversight.
Though it has been written about in IWT at various times in the past year, a refresher never hurts: the GENIUS Act generally prohibits anyone other than a “permitted payment stablecoin issuer” from issuing a payment stablecoin in the United States and bars digital asset service providers from offering non-compliant stablecoins to U.S. users. Importantly, the OCC’s draft rule operationalizes that framework, covering reserve asset standards, mandatory redemption at par, liquidity and risk management controls, independent audits, supervisory examinations, custody requirements, and application pathways for new issuers. It also introduces what the agency describes as a “capital and operational backstop” and proposes amendments to existing capital adequacy and enforcement rules, signaling a reality that we’ve seen coming for a while now – that stablecoin oversight won’t be just some standalone experiment, but will almost assuredly be integrated into the broader prudential supervisory regime.
The agency states that it will have regulatory / enforcement authority over certain permitted payment stablecoin issuers, including subsidiaries of national banks and federal savings associations, federally qualified payment stablecoin issuers, and certain state-qualified issuers. Notably, the proposal also asserts OCC regulatory authority over foreign payment stablecoin issuers seeking U.S. access, potentially bringing offshore actors within the scope of federal supervision if they wish to operate in the U.S. market.
And though this implies that some jurisdictional risk appears to have been contemplated in this rule – conspicuously absent from the proposal are Bank Secrecy Act and sanctions requirements – though the OCC indicated these “will be addressed in a different proposed rule” in coordination with the Treasury Department. Specifically, “Proposed § 15.13 addresses the remaining requirements and standards required under section 4(a)(4)(A)(iv) of the GENIUS Act [and] also addresses interest rate risk management standards under section 4(a)(4)(A)(iii) of the GENIUS Act.” That sequencing either suggests a “layered regulatory approach,” or an effort to get this portion of the NPRM faster.
To that end – while the statute requires the new stablecoin regime to take effect no later than January 2027 – implementation could technically begin as soon as 120 days after final rules are issued. If rulemaking proceeds “efficiently,” the transition window could be meaningfully shorter than the statutory 18-month outer bound.
How quickly it proceeds, though, may come down to the well-documented stablecoin “loopholes” within the GENIUS Act. If you’ll recall – the overall concern is that as currently written, nonbanks are allowed to recreate deposit-like products without deposit-like rules – meaning local lenders will be left competing on an uneven playing field. The specific “pain points” (forgive the understatement) that advocates – led by our own TBA – are fighting to resolve are:
- Prohibiting nonbanks from paying interest on deposits or deposit-like products
- Prohibiting nonbanks from offering reward or incentive programs that function as interest substitutes
- Not extending FDIC insurance or FDIC-like protections to nonbank entities
- Applying traditional insolvency and bankruptcy rules, without granting stablecoin holders super-priority lien status
- Avoiding special regulatory carve-outs or preferential treatment for certain states or entities (e.g., repeal or revise Section 16(d))
In an attempt to quell – or possibly dismiss – concerns surrounding potential deposit displacement, OCC Chief Jonathan Gould has publicly downplayed the likelihood of sudden destabilizing outflows, opining that any material deposit flight would not occur overnight or without warning. In broader remarks accompanying the proposal, Gould framed the rulemaking as part of a larger effort to “advance American innovation through payment stablecoins,” noting that the agency “look[s] forward to comments on our proposal to implement it” and even welcoming renewed interest in bank charters as “a sign of a healthy banking system.”
He emphasized that applications would continue to be evaluated on a case-by-case basis, consistent with statutory factors and the OCC’s high supervisory standards, while also committing to work with OCC-supervised banks to clarify new ways to conduct “the very old business of banking” and embrace emerging technologies such as AI. Relatedly, some industry observers have argued that properly regulated stablecoins could prove comparatively resilient in stress events, given the requirement to maintain 100% reserves backing 1:1 redemptions, as compared to traditional fractional reserve banking models.
Comment periods for NPRMs are arguably always important – but here, the broader crypto industry at large – not just banks and traditional industry advocates – will have the chance to weigh in; meaning that supporters can double down on even more structure and clarity, while opponents (particularly those not accustomed to prudential regulation) may push back that the rule is already overly detailed or operationally heavy.
The (376 page!) NPRM can be found here: [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] (what a title!)
The OCC’s related announcement can be found here: [OCC Bulletin 2026-3]
Excerpts from Jonathan Gould’s testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on the OCC’s priorities and activities (in which he spoke about the GENIUS ACT, regulatory reform, and other topics) can be found here [News Release 2026-10] and the full testimony is here [Statement of Jonathan V. Gould Comptroller of the Currency]
And, for posterity’s sake – TBA’s Grassroots Action Center – where Texas bankers can learn more about their fight, and can contact their State Senators to “ask them to close the loophole and ensure that the GENIUS Act’s prohibition on interest payments by stablecoin issuers unambiguously covers digital asset exchanges, brokers, dealers, and their affiliates” – can be found here: [Grassroots Action Center]
Written by:
Brett Goodnack, JD, CAMS
Compliance Advisor