a Stablecoin Issuer may be able to demonstrate monetization in different ways, such as establishing that it maintains appropriate repurchase arrangements through which it can quickly generate cash to satisfy redemption requests. The OCC suggests that larger Stablecoin Issuers or those with more complex operations may need multiple monetization channels and/or may need to periodically conduct actual monetization transactions to demonstrate compliance with this requirement. The Proposed Rules would permit Stablecoin Issuers to withdraw excess reserve assets ( i.e. , reserves above the 1:1 floor) once per month only upon publication of a monthly composition report of its reserve holdings on its website pursuant to the Proposed Rules (as discussed below). The OCC states in the Proposing Release that self-reported determinations of excess reserves without independent certification, as required with the composition report, would undermine public confidence and create misconduct risk. However, this limitation would have significant implications for Stablecoin Issuers’ reserve management practices. For example, this lock-up period may disincentivize issuers from holding a large amount of excess reserves and may concentrate withdrawals immediately after publication of the monthly composition report.
Reserve Asset Diversification, Maturity, Liquidity
The GENIUS Act requires the OCC to adopt regulations implementing reserve asset diversification requirements. To this end, the OCC proposes two alternatives, only one of which will be adopted. The first option, which the OCC refers to as “Option A”, would codify a principles-based general requirement with an optional safe harbor containing quantitative requirements. Option A would also require an assessment of the risk of holding reserve assets at a limited number of financial institutions. The second option, “Option B”, would make the quantitative requirements from Option A’s safe harbor mandatory for all Stablecoin Issuers.
Safe Harbor or Minimum Requirements
Under Option A, a Stablecoin Issuer would be required to maintain reserve assets that are “sufficiently diverse to manage potential credit, liquidity, interest rate, and price risks.” Option A includes a “safe harbor” for compliance in which the Stablecoin Issuer would be deemed to meet the requirements if, on each business day, the Stablecoin Issuer maintains: at least 10% 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 (no more than 50% of this amount may be held at any one “eligible financial institution” 18 to qualify for the safe harbor);
18 Under the Proposed Rules, an “eligible financial institution” would be defined as a Federal Reserve Bank or a person that is eligible to hold reserve assets in custody under Section 10(a) of the GENIUS Act and complies with the applicable requirements. To be eligible under Section 10(a) of the GENIUS Act, a person must be subject to either: (i) supervision or regulation by a primary federal payment stablecoin regulator or the SEC or CFTC; or (ii) supervision by a State bank or credit union supervisor.
March 2026 / Page 9
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