OCC Issues First Substantive Rulemaking Under the Genius Act

On February 25, 2026, the Office of the Comptroller of the Currency (OCC) released a 376-page Notice of Proposed Rulemaking (NPRM) to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), signed into law on July 18, 2025. The NPRM is the first comprehensive, substantive regulatory framework for payment stablecoin issuance published by any federal banking agency. The OCC has opened a 60-day comment period and is soliciting feedback on 211 questions spanning the full lifecycle of a payment stablecoin. Comptroller Jonathan Gould testified before the Senate Banking Committee on February 26 in connection with the proposal. This Client Alert provides an initial summary. More detailed analyses will follow.

What the NPRM Does and Who It Covers

The NPRM creates a new 12 CFR Part 15 dedicated to payment stablecoins and proposes conforming amendments to Parts 3 (capital adequacy), 6 (prompt corrective action), 8 (assessment fees) and 19 (rules of practice and procedure). The practical effect is to embed stablecoin issuance into the existing bank regulatory architecture rather than create a separate regime. For clients structuring applications or building compliance programs, this means supervisory expectations, examination cadences and enforcement tools will largely mirror what national banks and federal savings associations already face.

• The NPRM applies to national banks and their subsidiaries, federal savings associations and their subsidiaries, federal branches, nonbank entities seeking OCC approval as “Federal qualified payment stablecoin issuers,” state-qualified issuers subject to OCC enforcement authority and foreign payment stablecoin issuers seeking U.S. market access. Under GENIUS, only “permitted payment stablecoin issuers” may issue payment stablecoins in the U.S.; everyone else is barred.
• Entities must either be a subsidiary of an insured depository institution approved by the OCC, or a “Federally qualified” nonbank issuer chartered and approved by the OCC. Denial decisions must be supported by reasoned explanations and are subject to appeal rights. OCC is also considering limiting each permitted issuer to a single branded stablecoin, which would restrict white-label issuance models and could force restructuring of arrangements that some fintechs have been using.

Key Substantive Provisions

• Permitted activities: Issuance and redemption of “payment stablecoins”; reserve management; custodial and safekeeping services for stablecoins, reserves and private keys; assessing fees; and acting as principal or agent. Issuers are prohibited from using deceptive names suggesting U.S. government backing, marketing stablecoins as legal tender, or representing that stablecoins are FDIC-insured.
• Prudential standards and supervision: Applies traditional bank safety-and-soundness expectations, including regular examinations, compliance monitoring and corrective action authority. Capital and liquidity standards would be set case-by-case based on business model, balance sheet composition and operational resilience. The OCC will have authority to revoke or rescind issuer approvals and to impose capital and operational backstop requirements.
• Reserve requirements: Full 1:1 reserve backing with permissible assets: U.S. currency, insured bank deposits, short-term U.S. Treasuries (93 days or less), certain repo transactions cleared by SEC-registered clearing agencies or with prior OCC approval and approved money market funds (including tokenized forms where permitted). Reserves may not be pledged, rehypothecated or reused except in narrow circumstances (e.g., margin obligations, standard custodial obligations or creating liquidity through repo of qualifying T-bills).
• Redemption and transparency: Redemption at par within two business days under normal circumstances. If daily redemptions exceed 10% of circulating supply, issuers may extend the window to seven calendar days. Monthly public disclosure of reserve composition confirmed by an independent registered public accounting firm, with CEO/CFO certifications to regulators. False statements carry penalties.
• Interest and yield prohibition: The NPRM reiterates the GENIUS Act’s statutory prohibition (Section 4(a)(11)) on paying interest or yield to stablecoin holders and proposes a rebuttable presumption that an issuer violates this prohibition where: (i) the issuer has an arrangement with an affiliate or related third party, and (ii) that third party pays interest or yield to holders in connection with holding the stablecoin. The OCC specifically targets two workarounds: the Coinbase/Circle USDC revenue-sharing model and the Paxos/PayPal PYUSD model (where Paxos is the technical issuer, but PayPal pays approximately 4% rewards to holders). The OCC does retain certain exceptions, including independent payments by merchants and revenue-sharing payments by issuers to white-label distribution partners. Issuers may submit written materials to rebut the presumption. The interplay with the White House’s reported March 1 deadline for the banking and crypto industries to resolve stablecoin yield disputes, and the ongoing CLARITY Act negotiations, adds urgency to the comment process.
• Foreign payment stablecoin issuers: The NPRM extends OCC oversight to foreign payment stablecoin issuers, which the GENIUS Act defines as entities organized or domiciled outside the United States that are not otherwise permitted payment stablecoin issuers. Under the statute, a foreign issuer may offer or sell payment stablecoins to U.S. persons only if: (i) the Secretary of the Treasury has determined that the issuer’s home country regulatory regime is “comparable” to the framework established under the GENIUS Act; (ii) the issuer registers with the OCC; (iii) the issuer holds reserves at a U.S. financial institution sufficient to meet the liquidity demands of U.S. customers; and (iv) the issuer consents to U.S. jurisdiction for enforcement purposes. Issuers domiciled in countries subject to comprehensive U.S. sanctions or designated as primary money laundering concerns are categorically barred. The OCC will maintain a public list of registered foreign issuers and will subject them to examination, reporting and enforcement comparable to domestic issuers. Foreign issuers that fail to comply are subject to rescission of their registration. This regime has significant implications for offshore stablecoin issuers (especially Tether) that currently serve U.S. users, and for digital asset service providers that offer or sell foreign-issued stablecoins to U.S. customers.

Why This Matters

• This is the first fully substantive regulatory framework for payment stablecoins issued by any federal banking regulator. It covers the entire lifecycle: issuance, reserves, redemption, risk management, audits, supervision, custody, capital backstops, wind-down and enforcement. For banks considering stablecoin issuance and for existing issuers evaluating a federal path, the NPRM provides the first concrete picture of what operating requirements will look like.
• The interest and yield provisions are where the real fight will be. The OCC’s interpretation goes further than many expected, particularly given that Comptroller Gould has generally been viewed as supportive of the industry. By addressing yield at the rulemaking level, the OCC may have set a no-yield baseline for GENIUS-compliant payment stablecoins, which could either resolve this dispute under CLARITY Act or generate further legislative friction.
• The Federal Reserve and NCUA have not yet issued implementing regulations. Treasury published an Advanced NPRM in September 2025 on BSA/AML/OFAC issues but has not issued proposed rules. The GENIUS Act’s effective date is the earlier of January 18, 2027, or 120 days after the primary federal regulators issue final rules, meaning the OCC’s move puts pressure on the other agencies and could accelerate the overall timeline.