On February 25, 2026, the Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking (proposal) to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This proposal formally brings payment stablecoins into the U.S. prudential regulatory landscape. Instead of viewing payment stablecoins as a novel asset class, it frames their issuance and related activities as a banking-adjacent function with the potential to create liquidity pressures, operational risk, and systemic fallout. If finalized, the proposal would create federal licensing pathways for institutions, introduce capital and liquidity requirements, codify governance and operational resilience expectations, establish custody safeguards and disclosure standards, and extend supervision to certain foreign stablecoin issuers. These measures signal how the agency views, and intends to supervise, payment stablecoins, and lay the groundwork for a unified prudential framework against the backdrop of payment stablecoins’ rapid growth and emerging risks.
Why This Proposal Matters Now
Enacted on July 18, 2025, the GENIUS Act establishes a framework for the issuance and redemption of payment stablecoins in the United States. Congress, through the GENIUS Act, directed the federal prudential regulators to move quickly to develop a comprehensive regulatory framework for the issuance, governance, and use of payment stablecoins in the financial system. The GENIUS Act establishes a one-year deadline for agencies to develop implementing regulations with certain provisions becoming effective on the earlier of 18 months after the law’s enactment, i.e., January 18, 2027, or 120 days after the appropriate federal regulators issue final implementing regulations.
The GENIUS Act explicitly defines payment stablecoins, outlines prudential expectations, and imposes self-executing provisions that take effect regardless of agency rulemaking. This mandate comes at a time of widespread innovation and adoption of digital assets, as well as the expanded recognition of the potential benefits associated with the use of dollar-backed stablecoins in payments, settlement, and short-term liquidity. At the same time, policymakers have sharpened their focus on financial stability risks, including but not limited to liquidity run dynamics, reserve asset concentrations, and operational dependencies that resemble traditional banking activities. The proposal translates the GENIUS Act into a supervisory playbook with more clearly defined expectations for covered organizations and key stakeholders. The OCC’s proposal also reflects a general alignment of digital asset oversight with familiar safety-and-soundness standards to reduce regulatory gaps before payment stablecoins become embedded in the financial system.
The OCC is requesting public comment on all aspects of the proposal. Comments are due by May 1, 2026.
Key Provisions of the Proposal
Who Is Covered?
The proposed regulatory framework applies to the issuance and redemption of payment stablecoins and specified related activities conducted by permitted payment stablecoin issuers and other entities subject to the OCC’s authority under the GENIUS Act. This includes:
- national banks and federal savings associations and their subsidiaries;
- federally authorized nonbank payment stablecoin issuers;
- state qualified issuers subject to federal enforcement authority; and
- foreign issuers offering stablecoins to U.S. persons.
In addition, organizations that market, distribute, or facilitate payment stablecoin transactions may fall under the OCC’s purview if they perform services that are expressly regulated under the GENIUS Act, including reserve management; custody or safekeeping of reserve assets, stablecoins, or private keys; or redemption services.
The proposal also clarifies how federal oversight applies across different charter types and jurisdictions. State‑chartered issuers may be subject to state requirements and federal requirements under the OCC’s framework, depending on GENIUS Act thresholds and transition mechanics, ensuring consistent standards across the national market. This supervisory treatment reflects the regulators’ intent to close gaps in oversight and facilitate the development of uniform prudential expectations regardless of charter. Foreign issuers are in scope of OCC supervision to the extent that they meet GENIUS Act conditions and offer stablecoins to U.S. persons, maintain U.S. operations, or utilize U.S. custodians or intermediaries, which brings certain cross‑border activity into a comparable supervisory scope. By extending coverage to both domestic and foreign issuers, the proposal aims to minimize opportunities for regulatory arbitrage.
Licensing & Application Pathways
The proposed rule introduces a structured licensing framework that sets forth pathways for organizations seeking to become a permitted payment stablecoin issuer (PPSI). The application framework resembles a charter-level review process. As such, applicants must submit a comprehensive package that includes governance documentation, reserve management policies, capital plans, cybersecurity frameworks, and operational resilience programs, among other items, for regulatory review. However, the individual pathways for federal, foreign, and state issuers each have nuanced differences:
- Federal Issuers: Insured national banks, federal savings associations, and insured federal branches seeking to issue through a subsidiary, as well as nonbanks, uninsured national banks, and uninsured federal branches seeking to issue as federal qualified issuers, must apply to the OCC. The OCC must notify applicants within 30 days whether an application is “substantially complete.” A substantially complete application is deemed approved on the 120th day unless the agency issues a denial.
- Foreign Issuers: The secretary of the Treasury must first make a preliminary determination that the home jurisdiction’s regime is “comparable” to the GENIUS Act. Once deemed comparable, the applicant would then apply with the OCC. Registration is deemed approved on the 30th day unless the agency rejects the application. It is important to note, foreign issuers must adhere to OCC supervision, provide reports comparable to other permitted issuers, and meet the same reserve, redemption, and interest prohibition standards applicable to domestic payment stablecoin issuers.
- State Issuers: A nonbank state-qualified issuer that exceeds $10 billion in outstanding stablecoin issuances must notify the OCC within five calendar days and either transition to the federal framework within 360 days or halt new issuances until the organization falls below the $10 billion threshold. Notably, the proposal would mandate a capital analysis to be completed within 270 days and an initial OCC examination within six months after the issuer’s compliance notification. Waiver from federal supervision is also possible with certain considerations, e.g., a state regime’s prudential rigor, examination history, and related factors.
Furthermore, recognizing that potential systemic risks may originate outside federally chartered institutions, the OCC proposes to maintain authority to impose restrictions or take enforcement action against nonbank state-qualified issuers under unusual or exigent circumstances.
The licensing process is designed to ensure that only well‑capitalized, well‑governed, and operationally resilient entities enter the market, creating a prudent bar for participation and reducing systemic risk.
Liquidity & Reserve Requirements
The proposal places reserve management at the center of payment stablecoin safety and soundness. The proposed framework combines a strict 1:1 reserve backing with distinct capital and operational resilience requirements, positioning payment stablecoin issuance alongside traditional supervised activity rather than treating it as purely an “asset-based” product. Accordingly, reserve assets must be identifiable, segregated, and held at a fair value equal to or exceeding the outstanding issuance value at all times. In addition, reserves must be held directly by the issuer or in the custody of an eligible financial institution.
Consistent with the GENIUS Act, permissible reserves are limited to high-quality, highly liquid assets including cash, Federal Reserve (Fed) balances, demand deposits, and short‑dated U.S. treasuries, among others. Beyond holding eligible assets, issuers must demonstrate the operational capability to readily access and monetize reserves to meet redemption demands. An organization’s size, risk profile, business model, activities, and operations would play a large role in how it demonstrates readiness. While not required, the proposal acknowledges that issuers may need multiple monetization channels to avoid scenarios where the issuer may be “obliged to accept unfavorable pricing when monetizing reserve assets under stress.”
To implement reserve diversification requirements and address concentration and interest‑rate risk, the OCC proposes two alternative approaches: a principles‑based requirement with an optional safe harbor (Option A), or mandatory quantitative standards (Option B):
- Option A: An issuer would be deemed compliant if it maintains at least 10% “daily liquidity,” at least 30% “weekly liquidity” in defined near‑term liquid amounts, no more than 40% exposure to any one eligible financial institution, no more than 50% of daily liquidity at any one eligible financial institution, and a portfolio weighted average maturity of 20 days or less.
- Option B: The same quantitative standards would be imposed as mandatory daily requirements, rather than an optional safe harbor. In addition, PPSIs with an outstanding issuance value of $25 billion or more would be required to maintain at least 0.5% of their reserve assets in the form of insured deposits or insured shares at an insured depository institution, up to a cap of $500 million.
The proposed rule further mandates the monthly publication of a reserve composition report. Notably, a registered public accounting firm must conduct an examination of this report which, along with a certification by the chief executive officer and chief financial officer attesting to its accuracy, must be submitted to the OCC monthly. In addition, the issuer would be required to publish on its public website, by noon on the fifth day of each calendar month, the monthly composition of the issuer’s reserves held as of noon on the last day of the previous month.
Capital Considerations
Among the financial mechanics, PPSIs would be subject to minimum capital requirements that would be tailored to the business model and risk profile of a PPSI. Minimum capital requirement would be set as part of the chartering and licensing process that applies through a “de novo period,” i.e., generally three years. During this time, the agency proposes a $5 million floor on de novo minimum capital. In addition, the proposal provides that each issuer must develop a process to assess and meet its capital requirements. After the “de novo period,” all issuers must maintain capital at a level that remains commensurate with the issuer’s business model and risk profile, with evaluation by the OCC through the examination process. The proposal outlines that regulatory capital would be comprised of only two elements—Common Equity Tier 1 and Additional Tier 1.
The OCC also proposes that as an operational backstop, issuers must hold an identified pool of highly liquid assets that is maintained separately from capital requirements and reserve assets. The operational backstop is intended to support continued operations during disruptions and is sized based on the issuer’s total expenses over the prior 12 months. If an issuer fails to meet its minimum capital or the operational backstop as of a quarter-end, the proposal would restrict the issuer from issuing new payment stablecoins until the shortfall is cured. If the issuer remains out of compliance for two consecutive quarters, the issuer would be required to liquidate reserve assets and redeem outstanding payment stablecoins with limits placed on the redemption fees that could be charged in that wind-down scenario.
Custody & Safeguarding Standards
The proposal also would implement custody provisions by imposing prudential safeguards on entities that provide custodial or safekeeping services for stablecoin reserves, payment stablecoins used as collateral, or the private keys used to issue payment stablecoins. To operationalize the safeguards, the proposal provides definitions for covered assets, covered custodians, and covered customers.
The custody framework is designed to help ensure that covered assets are treated as customer property and insulated from creditor claims. As such, covered custodians would be required to separately account for each customer’s covered assets and take appropriate steps to protect covered assets from creditor claims, supported by policies and procedures and internal controls commensurate with the custodian’s size, complexity, risk profile, and the nature of the assets.
The proposal also addresses modern custody mechanics, which would require custodians to maintain possession or control of covered assets held directly, including through a digital wallet where the custodian controls the associated private keys, and permits the use of sub-custodians. The proposal would allow the use of omnibus accounts to commingle covered assets of multiple customers, but only if the custodian can satisfy the customer property protections and the arrangement adheres to all applicable laws. Finally, the proposal implements a carve-out so that providing hardware or software for self-custody does not in itself trigger custody requirements.
Governance, Risk Management, & Operational Controls
The proposal would require PPSIs to implement a governance and controls framework that is comprehensive and appropriately aligns with the issuer’s size and risk profile. Core governance components include board and management oversight, robust internal controls and information systems, and an adequate independent audit and review function that tests controls and validates key calculations and disclosures. The proposal also requires issuers to maintain a comprehensive security program, including asset inventory, control validation, smart contract oversight, incident response, and continuity and recovery planning. Third‑party risk considerations are addressed as issuers are expected to establish a comprehensive risk framework across the vendor management lifecycle. While Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements are expected to be addressed through separate rulemaking in coordination with the U.S. Department of the Treasury, the proposal includes requirements that an issuer must submit a certification of AML and sanctions standards compliance and would be subject to OCC supervisory oversight related to AML and sanctions controls.
Disclosure & Transparency Requirements
Transparency is a core pillar of the proposed regulatory framework with issuers tasked with meeting robust disclosure obligations. As previously noted, public reserve disclosures are required monthly and must include asset composition valuation detail to provide investors and potential users with clear visibility into the stability and liquidity of the reserve pool.
Redemption rights must be clearly and prominently disclosed, ensuring that users understand the terms and conditions governing redemption. Issuers must provide their redemption policy and redeem payment stablecoins at par within two business days of a request. Further, if redemption requests exceed 10% of outstanding issuance value in any rolling 24‑hour period, the issuer may extend the redemption timeline to seven calendar days for all outstanding and subsequent requests.
Ongoing reporting to the appropriate regulators is required, covering reserves, capital, operational incidents, and compliance metrics. The proposal also prohibits misleading statements about reserve composition, redemption rights, or risk characteristics. These transparency requirements are designed to align stablecoin disclosures with the discipline expected of regulated financial products and to promote market confidence.
Supervisory & Enforcement Implications
The proposal also outlines OCC examination expectations, which includes evaluating operations and financial condition; operational, technological, and compliance risks that could threaten safety and soundness or U.S. financial stability; as well as the systems used to monitor and control those risks. Issuers would initially be subject to a default examination cycle of at least one full‑scope, on-site or remote, exam every 12 months, with the potential for extended supervisory intervals for lower‑risk issuers, subject to supervisory judgment. In these cases, an extended examination cycle of 18 to 36 months may be provided.
Prohibition on Paying Yield
The GENIUS Act bans PPSIs from paying any interest, yield, or comparable benefit, whether delivered in cash, tokens, or other consideration, when the benefit is tied solely to owning or holding the payment stablecoin. A key point of friction has been whether this prohibition can be circumvented through indirect rewards structures, such as paying an affiliate or third party to pass yield through to holders. The OCC’s proposal would codify the statutory prohibition and add a rebuttable presumption to related activity. If an issuer enters an arrangement where an affiliate or related third party pays yield to stablecoin holders, the payment may be attributed to the issuer and treated as prohibited. The OCC also signals that structures outside the presumption could still violate the law or be viewed as evasion based on an analysis of facts and circumstances, preserving supervisory discretion on a case-by-case basis. The OCC noted that this prohibition is not intended to prevent an issuer “from sharing in the profits derived from the payment stablecoin with a non-affiliate partner in a white-label arrangement.”
Key Questions & Issues to Watch
Even if the proposal is finalized largely as proposed, several open calibration and interpretation issues will determine the true compliance measures to which issuers will be subjected. For organizations, the most important questions reside in how key design choices in the final rule could affect capital intensity, reserve requirements, cross‑border participation, and time-to-market, among other items.
Now that the OCC’s regulatory perimeter has been outlined, institutions must decide next steps and how they proceed. In addition to engaging in the comment process, organizations seeking to issue payment stablecoins have some key questions for consideration, including:
- How does our current or planned stablecoin strategy align with the proposed issuer categories?
- What changes would be required to meet reserve, redemption, and capital standards?
- How does the yield prohibition affect our product road map?
- What operational upgrades (cybersecurity, liquidity, TPRM, etc.) are needed to meet supervisory expectations?
How Forvis Mazars Can Help
The proposal signals that regulatory certainty for payment stablecoins is increasing, but so are the supervisory expectations. As the regulatory landscape evolves, financial institutions face new challenges and opportunities in stablecoin issuance, reserve management, and digital asset compliance. Regardless of the proposal, issuance of payment stablecoin may create new facets of risk or expand upon existing risk. It is important to effectively assess risks and rewards in the context of competition and supervisory expectations; Forvis Mazars is here to help you stay ahead.
We work with financial institutions to create tailored road maps that align with GENIUS Act requirements, guiding you through licensing strategies, reserve structuring, and operational readiness. Beyond strategic and regulatory planning, we provide deep-dive evaluations of your BSA/AML programs, cybersecurity infrastructure, and liquidity controls to help ensure your institution is not only technically compliant—but fundamentally resilient.
Whether you’re assessing the risks and benefits of payment stablecoin issuance, preparing for program implementation, or strengthening your post-launch controls, Forvis Mazars delivers the insight, structure, and assurance you need to lead with confidence in the digital asset space.
We are also uniquely positioned to support monthly examinations of reserve requirements and offer independent attestation services that align with the transparency and accountability mandates of the GENIUS Act and the supervisory expectations and requirements contained in the proposed rule.
For more information, please contact the U.S. Financial Services Regulatory Center at Forvis Mazars or reach out to a Forvis Mazars professional.