OCC Notice of Proposed Rulemaking: Implementation of the GENIUS Act for Stablecoin Issuance

Summary

SIFMA and SIFMA AMG provided comments to the Office of the Comptroller of the Currency's (OCC) on its Notice of Proposed Rulemaking ("the Proposal") implementing the Guiding and Establishing National Innovation for U.S. Stablecoins ("GENIUS") Act for the issuance of stablecoins by entities subject to OCC jurisdiction.

Excerpt

SIFMA supports the development of a credible, risk-sensitive prudential framework for payment stablecoin activity and commends the OCC for advancing a Proposal that recognizes the multi-party nature of the payment stablecoin ecosystem and the need for clear supervisory standards governing issuers, custodians, and other participants. A well-calibrated framework is essential not only to the safety and soundness of payment stablecoin issuers themselves, but also to the broader capital markets infrastructure with which the payment stablecoin ecosystem will interact.

At the same time, SIFMA believes several aspects of the Proposal would benefit from additional clarification, more targeted calibration, and, in some cases, a more functionally differentiated approach. Key provisions of the Proposal - particularly the reserve asset diversification and maturity requirements, the liquidity and redemption framework, and the treatment of custody arrangements - will have significant spillover effects on capital markets. At the scale of issuance that the OCC itself projects for the payment stablecoin market, permitted payment stablecoin issuer ("PPSI") reserve asset demand has the potential to materially affect short-dated Treasury pricing and liquidity, the functioning of repurchase markets, and the role of government money market funds ("MMFs") as reserve vehicles.