OCC Finalizes Rule Under GENIUS Act for Payment Stablecoin Issuers

Alongside the final rule, the OCC introduced revised weekly and quarterly reporting forms for PPSIs and a bulletin detailing the process for filing applications and requesting waivers under the GENIUS Act, although the application form has not yet been released.

Key changes compared to the OCC’s March 2026 proposal include the handling of interest payments and yield arrangements. The OCC removed a proposed presumption that PPSIs would pay prohibited interest, retaining a prohibition on yield aligned with the GENIUS Act. The agency plans to oversee yield arrangements through application reviews and ongoing supervision.

Regarding reserve requirements, the OCC shifted from two initial alternatives to a hybrid approach. The daily liquidity floor has been reduced from 10% to 5%, with the 50% sublimit and the 30% weekly liquidity requirement being eliminated. The maximum exposure to a single counterparty remains at 40%, but certain exceptions apply, such as for U.S. government exposures.

The final rule mandates stress testing of reserve asset portfolios to ensure they meet outstanding issuance values during stressed market conditions. No specific buffer level is required, which may allow some PPSIs to operate without maintaining a buffer.

Changes to the capital requirements were also made. The rule retains individualized minimum capital requirements with a $5 million floor for new issuers and a requirement for operational backstops of 12 months of expenses. However, certain one-time expenses may be excluded from this calculation, and up to 50% of the backstop could be funded through qualifying debt.

Redemption processes were updated as well. Although the two-business-day deadline for redemption requests is maintained, the automatic extension if requests exceed 10% of outstanding issuance value has been removed. Instead, the OCC must be notified within 24 hours when such requests occur.

The OCC also expanded the list of permissible activities for PPSIs, which now includes managing foreign exchange risk and conducting tests on distributed-ledger platforms. The compliance deadline for new payment stablecoin issuance is set for January 18, 2027. Existing issuers will not be grandfathered under the new rule but may seek a one-year waiver if they have pending applications.

This final rule by the OCC raises several important questions regarding stress testing, capital requirements, and the scope of activities supporting stablecoin issuance. As the effective date approaches, industry players should evaluate how the new regulations impact their operations.