BPInsights: November 7, 2026

Most Stablecoins Fall Short of GENIUS Act Reserve Requirements

A recent BPI analysis examines which stablecoins on the market would comply with U.S. legal requirements to back coins with highly liquid assets and finds that only two of 10 of the largest dollar stablecoins - representing 26 percent of tokens outstanding - would meet GENIUS Act reserve requirements as of June 30, 2026. The reserve requirements, set by the GENIUS Act, aim to reduce the risk that stablecoins "de-peg" from the dollar, or trade below $1 per coin. 

• Four of the 10 largest stablecoins outstanding are offered onshore and are expected to be subject to GENIUS Act requirements when the Act becomes effective in January 2027.  
• As of June 2026, Circle's USDC and Paxos PYUSD met the GENIUS Act's requirements to back coins with U.S. Treasury securities with less than 93-day maturity, overnight reverse repurchase agreements secured by Treasury securities and bank deposits, among other highly liquid assets.  
• The other two stablecoin issuers expected to be subject to the GENIUS Act would not meet these reserve asset requirements, because as of June 2026 both are backed by money market funds that hold agency debt and longer dated Treasury securities. 
• Most dollar stablecoins outstanding - those offered offshore and those backed by crypto assets - stand outside the new legal framework and hold much riskier reserve asset portfolios. Although any stablecoin presents risk of de-pegging, these stablecoins face a heightened risk of de-pegging. 

Five Key Things

1. Midterms Shake Up House Financial Services Committee, Senate Banking

Tuesday's election results will lead to several changes in the House Financial Services and Senate Banking committees. On the House side, Financial Services Committee Ranking Member Maxine Waters (D-CA) is expected to take over as Chair. Senior member Rep. Andy Barr (R-KY) will leave the panel after winning the U.S. Senate race in Kentucky. Rep. French Hill (R-AR), the current Chairman, was successful in winning his race and is likely to remain the top committee Republican, while other senior committee members -Republican Reps. Bryan Steil, Digital Assets Subcommittee Chair; Ann Wagner, Capital Markets Subcommittee Chair; and Bill Huizenga, Vice Chair of the committee-all lost their races. In the Senate, Ranking Member Elizabeth Warren (D-MA) is likely to become Chair of the Senate Banking Committee.

2. BPI Calls on Treasury to Close Crypto AML Gaps

The Treasury Department should impose illicit finance requirements on crypto intermediaries, thereby closing regulatory gaps that enable criminals to exploit the financial system through digital asset channels, BPI said in a letter Friday. As exemplified by the record-breaking North Korean hack of Binance, crypto has increasingly become the currency of money launderers, terrorist financers and other bad actors worldwide. "Despite their recorded increase in use, digital asset intermediaries that help facilitate the use of cryptocurrencies by bad actors do not face the same legal obligations to protect the financial system as banks do," the letter said. "This is inconsistent with a basic AML/CFT principle: the same activity presenting the same risks merits the same regulation. Departure from that principle means those looking to launder money, finance terrorism or evade sanctions will seek out the least regulated option."

• Limited Visibility: Banks' role in detecting criminal activity in the crypto ecosystem is constrained by their limited access to information. They can only see transactions in "on-ramps" and "off-ramps" to fiat currency, and lack the full visibility required to reconstruct a chain of payments - especially if the chain involves mixers, unhosted wallets, and other such intermediaries.
• Alternative Needed: The recent withdrawal of three FinCEN digital asset proposals underscores the need for FinCEN to expeditiously impose obligations on digital asset intermediaries to combat illicit finance risk in this ecosystem.
• Recommendations: BPI recommended that FinCEN ensure all digital asset service providers are designated as "financial institutions" under the Bank Secrecy Act, subjecting them to the full range of anti-money laundering obligations. Treasury should also: work with Congress to identify any gaps in oversight not covered by existing law; seek authority from Congress to sanction mixers, tumblers and other similar tools; and convene law enforcement, banks, stablecoin issuers and other relevant crypto players to facilitate information to support national interests.

3. OCC Releases AI Guidance for Examiners

The Office of the Comptroller of the Currency this week issued guidance for bank examiners on banks' use of artificial intelligence, which it called "super intelligence." The guidance directed examiners to refrain from treating AI as "a separate and distinct risk category," and clarified that "banks should not be required to define a separate SI risk appetite." The OCC said its AI framework should "be treated as a living document which is expected to change as technology, use cases, and supervisory understanding change and mature," given the evolving nature of the technology. The framework covers, among other items, the purpose of an AI system; controls that prevent unauthorized and unsafe actions of AI systems or agents; who is monitoring the system or agent and accountable for its use; and the bank's ability to detect, contain, recover from and remediate AI system or agent failures. The guidance comes amid recent public commentary about the potential risks of agentic AI in banking.

4. Stronger Together: How Banks Collaborate on Cybersecurity

Banks collaborate with each other, with other industries and with the U.S. government to safeguard the financial system against cyberattacks. The financial sector is a leader across critical infrastructure industries in cyber information sharing, having formed the first information sharing and analysis center in 1999 and a sector coordinating council in 2002. As frontier AI accelerates and amplifies cybersecurity threats to critical infrastructure, the banking sector's proactive, collaborative coordination is more crucial than ever. 

Here is an overview of the various organizations that bring together banks, other industries and/or government to coordinate defenses and responses to cyber threats. 

5. Crypto Spending Faltered in Competitive Midterm Races

Crypto firms spent millions of dollars in the midterms and "got clobbered" in competitive races, reports Molly White in the Citation Needed newsletter this week.

• "Of the twelve competitive races called so far, the side backed by crypto and AI super PACs lost nine," White wrote as of the morning of Nov. 4. "The PACs spent $74.7 million on the losing side of those races, compared to $28.3 million on the winning side."
• One of the most significant losses for crypto was the return of Sen. Sherrod Brown (D-OH), whom the industry spent $64 million to oppose.
• White notes that crypto PACs tend to use a "back the winners" strategy, "where they toss relatively small amounts of cash behind near-certain winners, both to buy (or reward) loyalty and to juice their win rates." She observes that "they're already running the same play this cycle."

In Case You Missed It

The Ledger

Here's the latest in digital assets.

• The Binance Hack Aftermath. Crypto exchange Binance resumed withdrawals early this week after more than $6 billion in assets was wiped from the exchange by hackers.
• Limited Protection. Binance has said it will reimburse customers who experienced losses, but "there does not appear to be any U.S. governmental or regulatory entity that could force Binance or other troubled crypto companies to help customers," the New York Times noted in a recent article. "If the company that holds your cryptocurrency, or provides storage for your digital wallet, is hacked or goes out of business, there are no federal guarantees or rules to help, according to the Federal Trade Commission," the Times reported. "And even if there were robust regulations, it would be hard to enforce them against companies that are not in the United States."
• North Korea Denies Responsibility. North Korea denied allegations that it was behind the Binance attack, after the Federal Bureau of Investigation identified the operation as being linked to North Korean hacker group TraderTraitor. The group has been connected to other crypto heists, according to the FBI.
• Custodia Urges Supreme Court to Review Master Account Denial Ruling. In a reply brief filed this week, Custodia, a Wyoming special purpose depository institution, urged the Supreme Court to reconsider a Tenth Circuit ruling that upheld the Federal Reserve's discretion to deny master account requests. Custodia has challenged the Fed's denial of its request for a master account, arguing that the ruling "vests extensive regulatory authority in unappointed bureaucrats" at the Fed's Reserve Banks, "creating a judicially sanctioned safe harbor for a newly constituted fourth branch of government." BPI has argued that the Federal Reserve Act does grant the Reserve Banks this authority, which is critical to protect the integrity of the payments system. The Second Circuit also upheld Fed discretion over account access.

Traversing the Pond

Here's the latest in international banking policy.

• Machado Calls for Tearing Down Ringfences. ECB supervisor Pedro Machado this week expressed support for a proposal to allow EU banks to support subsidiaries in other European countries in stress, unlocking "ring-fenced" liquidity. But he also noted that "[t]he proposal will … in particular try to introduce the sort of private safeguards that (ensure) ⁠the hosts feel comfortable and let fencing go." BPI suggested the EU should rethink the use of the waiver regime in comments on the EU's competitiveness consultation earlier this year.
• Capital Output Floor. In a speech earlier at the same conference, Machado defended the output floor, a capital provision that limits how much banks can reduce capital requirements through their internal models. "We should uphold rigorous capital standards, preserve the role of the output floor as a backstop to internal models and continue to address the costs of resolution, so that scale ⁠does not come at a cost to the taxpayer," he said.
• The Race to Replace Christine Lagarde. After ECB President Christine Lagarde recently announced her plan to depart the central bank early, EU leaders are aiming to appoint her successor at their Dec. 17-18 summit.

Member News

Goldman Sachs Pledges $500 Million to Launch Small Business AI Institute

Goldman Sachs recently announced the launch of the Goldman Sachs Small Business AI Institute, a major extension of its signature 10,000 Small Businesses program aimed at supporting AI adoption and application. The Institute is partnering with leading AI companies to provide entrepreneurs with the training and tools they need to integrate AI into their operations and grow and scale their businesses, part of a new $500 million commitment to fund the next chapter of Goldman's 10,000 Small Businesses initiative.

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