if the shortfall lasts for 15 consecutive business days (which may be extended in the OCC’s sole discretion), must begin liquidating its reserve assets and redeem its outstanding payment stablecoins (without imposing a fee). If a Stablecoin Issuer fails to meet any of the reserve assets requirements, the Proposed Rules would authorize the OCC to require the Stablecoin Issuer to submit a plan describing how it will attain compliance and under what timeline. If the OCC determines that a Stablecoin Issuer faces a significant risk of being unable to comply with the reserve requirements “within a reasonable time period,” the OCC has the authority under the Proposed Rules to order the Stablecoin Issuer to initiate the redemption of all outstanding payment stablecoins and may also pursue other measures, including enforcement actions, if appropriate.
Custody
The Proposed Rules also include custody requirements, including requirements for asset protection, a private key control standard, and an exclusion for entities that provide hardware or software to facilitate payments. The custody requirements would apply broadly to OCC-regulated entities and Stablecoin Issuers (“Covered Custodians”) and specify what assets are permissible for custody and how required reserves must be held. Covered assets would include:
payment stablecoin reserves,
payment stablecoins used as collateral,
private keys used to issue payment stablecoins, and
all cash and other property received in the course of providing those services, including interest credited on reserve assets held in a deposit account at the custodian. The use of sub-custodians would be explicitly permitted under the Proposed Rules, though the Covered Custodian would be responsible for sub-custodian oversight including adoption and maintenance of safeguards and internal controls. Sub-custodians would be independently subject to the GENIUS Act’s custody requirements.
Asset Treatment, Segregation, and Omnibus Accounts
The Proposed Rules would require Covered Custodians to treat covered assets as customer property and separately account for each customer’s assets. Covered Custodians would be required to protect the covered assets of customers from creditor claims on a Covered Custodian and any sub-custodian through policies, procedures, and internal controls commensurate with the Covered Custodian’s size, complexity, and risk profile and the nature of the relevant covered assets. However, the Proposed Rules contain a carveout for when an insured depository institution holds cash as cash on deposit, in which case the prohibition on commingling will not apply. In effect, bank custodians would be permitted to hold reserve deposits in the ordinary course without triggering the prohibition on commingling. The Proposed Rules would allow any Covered Custodian to commingle multiple covered customers’ covered assets in one or more omnibus accounts so long as it maintains adequate safe and sound practices.
March 2026 / Page 12
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