Rich by Coin

The OCC proposed a comprehensive GENIUS Act framework for capital and other requirements for payment stablecoin issuers, aiming to establish federal oversight while supporting innovation in the digital payments ecosystem. Issuers would need a federal charter to operate as permitted payment stablecoin issuers, with a case-by-case licensing process that considers each applicant’s business model, growth trajectory, operational risks and governance. The approach envisions an individualized evaluation similar to minimum capital standards for chartering national banks and includes a de novo period of about three years to monitor operations and adjust requirements as needed. A minimum capital floor of $5 million would be set for new entrants, ensuring sufficient resources to cover initial operations and early losses.

Issuers would be required to maintain liquid reserve assets including U.S. Treasuries, deposits at insured depository institutions, certain money market funds and cleared or tri-party reverse repurchase agreements, with OCC mulling a public list of acceptable assets to enhance transparency. The assets must be liquid and monetizable to meet redemption requests, and issuers must manage liquidity carefully to redeem stablecoins quickly even under stress. The OCC considered additional capital rules for risky reserve assets or counterparties but determined that diversified, liquid reserves and regular monitoring are sufficient to protect users without extra costs.

Issuers would be required to maintain common equity tier 1 capital and additional tier 1 capital sufficient to cover operational risks and ensure ongoing operations, consistent with OCC regulations for national banks and savings associations. A designated pool of highly liquid assets would act as an operational backstop, with the backstop amount calculated quarterly based on operating costs. Penalties would apply if capital or the backstop requirements are not met, including raising additional capital, reducing the size of operations, or converting less-liquid assets into highly liquid assets; if noncompliant for two consecutive quarters, the issuer would begin liquidating reserve assets and would be restricted from issuing new stablecoins going forward. Boards and management must maintain risk management frameworks and issuers must submit quarterly reports detailing financial statements, reserve holdings, and operational backstop amounts among other compliance metrics.