Marking an important milestone in the implementation of a new regime for payment stablecoins in the United States, on February 25, 2026, the Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking as directed by the Guiding and Establishing National Innovation for U.S. Stablecoins Act. The proposal outlines rules governing issuance, interest payments, licensing, risk management, supervision, and other matters involving permitted payment stablecoin issuers (PPSIs) subject to the OCC’s regulatory and enforcement authority under the Act as well as custody activities conducted by PPSIs and other entities regulated by the OCC. Comments on the OCC’s proposal are due by May 1, 2026.
The proposal is significant as the first articulation of the substantive expectations for stablecoin issuers by a U.S. regulator. And it will likely bring into sharp contrast differing views on the following issues:
- The Act’s prohibition against issuers’ payment of “any form of interest or yield” to payment stablecoin holders, particularly as applied to indirect payments arising from third-party arrangements.
- Whether PPSIs will be permitted to issue more than one brand of payment stablecoin.
- Fundamental tensions between issuer flexibility on the one hand, and market understanding of and confidence in stablecoins on the other.
The Act has a fast-moving timetable by design, taking effect on the earlier of January 18, 2027 or 120 days after the primary federal payment stablecoin regulators (OCC, FDIC, Federal Reserve, and NCUA) issue any final rules implementing it. Consequently, we expect the OCC to seek to issue final rules as soon as Q3 or early Q4 this year.
Covered Issuers
In accordance with the Act, the OCC’s proposed rules would apply only to those PPSIs and other entities that are subject to OCC authority under the Act and other applicable law. Covered entities are:
- National banks and federal savings associations and their subsidiaries.
- Certain U.S. branches, agencies, and subsidiaries of foreign banks.
- Nonbank entities that are or seek to be “federal qualified payment stablecoin issuers.”
- “State qualified payment stablecoin issuers” subject to the OCC’s authority under the Act.
- Foreign payment stablecoin issuers.
Certain portions of the proposal would apply only to covered PPSIs: (1) subsidiaries of national banks and federal savings associations authorized to issue payment stablecoins; (2) federal qualified payment stablecoin issuers; and (3) state qualified payment stablecoin issuers subject to the OCC’s authority under the Act.
Permissible Activities
The Act defines a payment stablecoin, in part, as a digital asset that the associated issuer is obligated to convert, redeem, or repurchase for a fixed amount of monetary value. Under the Act, PPSIs may:
- Issue and redeem payment stablecoins.
- Manage related reserves.
- Provide custodial or safekeeping services for payment stablecoins, required reserves, or private keys of payment stablecoins.
- Undertake other activities that directly support these foregoing permitted activities.
- Assess fees for purchasing or redeeming payment stablecoins.
- Act as principal or agent for payment stablecoins.
- Pay fees to facilitate customer transactions.
The proposal tracks these permitted activities and identifies some additional permitted activities that directly support a PPSI’s ability to issue and redeem payment stablecoins, manage reserves, and provide custodial or safekeeping services. For example, a covered PPSI may hold “non-payment stablecoin crypto-assets as principal necessary for testing a distributed ledger, whether internally developed or acquired from a third-party” because this activity helps ensure that the PPSI can “operate safely and effectively on a distributed ledger.”
Consistent with the Act, covered PPSIs would not be permitted to use terms related to the U.S. government in the name of a payment stablecoin, market a payment stablecoin as legal tender or as issued by the U.S. government, or imply that a payment stablecoin is backed by the U.S. government or federal deposit insurance.
Covered PPSIs also would not be permitted to “pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.” To address concerns about third-party relationships and “backdoor” yield or “rewards,” a covered PPSI would be presumed to be paying interest or yield to a holder if (1) it has a contract, agreement, or other arrangement with an affiliate or related third party to pay interest or yield to the affiliate or related third party; and (2) the affiliate or related third party (or an affiliate of a related third party) has a contract, agreement, or other arrangement to pay interest or yield (whether in cash, tokens, or other consideration) to a holder of any payment stablecoin issued by the covered PPSI solely in connection with the holding, use, or retention of the payment stablecoin.
The proposal would define a “related third party” as (1) a person offering to pay interest or yield to payment stablecoin holders as a service (such as persons acting on behalf of the PPSI); and (2) any person that the PPSI issues payment stablecoins to on the person’s behalf or under the person’s branding (such as a person that has white-labeled the PPSI’s payment stablecoin). If the person (or its affiliate) that has an arrangement with the covered PPSI is a related third party because the covered PPSI issues payment stablecoins on the related third party’s behalf or under its branding, then the holder would be considered a holder of a payment stablecoin issued by the covered PPSI only for that specific payment stablecoin. For example, if the related third party has a white-label relationship with the covered PPSI, the covered PPSI would be presumed to be paying interest or yield only for the payment stablecoin it issues under the white-label relationship, as opposed to other payment stablecoins issued through the related third party or by the covered PPSI outside the white-label relationship.
Reserve Requirements
Consistent with the Act, the proposal would require each covered PPSI to maintain identifiable and segregated reserve assets with a total fair market value that always equals or exceeds the outstanding issuance value of the covered PPSI’s payment stablecoins. Reserves would be required to be held either directly by the covered PPSI or with an “eligible financial institution” (generally, federally insured depository institutions that adhere to certain requirements and to Federal Reserve Banks). Covered PPSIs would also need to demonstrate the operational capability to access and monetize reserve assets promptly. This emphasis on constant one-to-one backing, recognized fair-value assessment, and demonstrable liquidity reflects the view embodied in the Act that redemption credibility is central to financial stability and market confidence in stablecoins.
Permissible reserve assets would be limited to highly liquid, low-risk instruments, including U.S. currency and Federal Reserve Bank credit balances, demand deposits and insured shares at insured depository institutions, short-term U.S. Treasury securities (having maturities of 93 days or less), certain overnight repurchase and reverse repurchase agreements collateralized by short-term Treasuries, and government money market funds invested solely in these qualifying assets. Tokenized versions of these assets would be permitted if they otherwise meet the rule’s requirements.
To address concentration and interest rate risk management of reserves, the OCC requests comment on two alternative diversification regimes: (1) a principles-based standard featuring optional quantitative safe harbor limits; and (2) mandatory quantitative limits. The OCC explains that while a diversification regime composed of discrete quantitative limits would remove issuer flexibility, it would be more straightforward and transparent than a principles-based approach.
Under both proposed regimes, covered PPSIs would be required to maintain minimum levels of daily and weekly liquidity, limit exposure to any single institution, and cap the weighted average maturity of their reserve portfolios at 20 days; and larger issuers (those with $25 billion or more in outstanding payment stablecoin issuance) would be required to hold a modest portion of their reserves as federally insured bank deposits or credit union shares.
The OCC’s reserve proposals also reflect elements of transparency and enforceability set forth in the Act. Each covered PPSI would be required to publish on its website a monthly report detailing the composition, fair value, average tenor, and custody location of their reserves. The report would need to be reviewed by a registered public accounting firm and its accuracy certified by members of the covered PPSI’s senior management.
If reserves fall below required levels on any day, automatic remediation measures apply. Covered PPSIs would be required to notify the OCC and cease net new payment stablecoin issuance, and if deficiencies persist, begin orderly liquidation and redemption without charging fees.
Redemption
The proposal also includes a prescriptive framework governing redemption. The OCC explains that it is critical that each covered PPSI satisfy its redemption obligations in a timely manner to maintain confidence in that covered PPSI and in the stablecoin industry. Further, each covered PPSI would be required to redeem any amount equal to or greater than one payment stablecoin, subject to appropriate customer screening and onboarding, reflecting the statutory requirement that each payment stablecoin be individually redeemable for a fixed amount.
Each covered PPSI would be required to disclose a clear redemption policy, including the timeframe for redemption (not to exceed two business days) and the process for submitting redemption requests. The proposal also addresses redemption during periods of market stress and would establish an automatic, nondiscretionary mechanism extending the period any requested redemption may be completed in. According to the OCC, this extension is intended to allow covered PPSIs sufficient time to liquidate reserve assets in an orderly manner, reducing “fire sale” risk and potential contagion—addressing both direct risks to the covered PPSI and to the financial system generally, taking into consideration the effect of such a demand on reserves and other PPSI-related assets held at other institutions—while still preserving a defined and enforceable redemption right for the holder.
Covered PPSIs would also need to clearly and conspicuously disclose the identity of the entity that issues the stablecoin (particularly important if covered PPSIs are permitted to issue more than one brand of stablecoin), their redemption obligations, and all fees associated with purchasing or redeeming payment stablecoins. Any changes to redemption-related fees would require at least seven calendar days’ prior notice to customers (including secure delivery to current customers) and need to be reflected in website disclosures and customer agreements.
Capital Requirements
The proposal would require that covered PPSIs maintain minimum capital levels tailored to their business models and risk profiles, including an individualized minimum capital requirement set during the licensing or chartering process, with a floor of $5 million for new (or de novo) covered PPSIs, which will typically apply during the first three years of operation or transition to OCC supervision. While the OCC notes that it is considering more prescribed capital requirements tied to issuance value, risk-based valuation of reserve assets, or other factors, the OCC indicates that it prefers the more flexible, principles-based approach reflected in the proposal.
Qualifying regulatory capital would need to consist of common equity tier 1 or additional tier 1 capital, but excluding tier 2 capital, each as defined under OCC regulatory capital rules. The OCC noted that it may adjust capital requirements as the industry evolves and notes its view that risk exposures for covered PPSIs are also addressed through other means (such as reserve asset quality and diversification requirements). According to the OCC, this generally aligns with capital adequacy expectations for uninsured national trust banks.
Following the de novo period, each issuer would be required to maintain capital adequacy based on its own assessment of its operational history and risk. However, the OCC could impose additional capital requirements if the issuers’ internal assessments are found deficient or if their risk profile changes significantly, including, if necessary, a remediation plan.
Operational Backstop Requirements
In addition to its stablecoin reserves and minimum regulatory capital, to provide sufficient liquidity if there is an operational disruption, covered PPSIs would also be required to maintain an “operational backstop”—a pool of highly liquid assets (such as U.S. currency, insured deposits, or short-term Treasuries) equal to the issuer’s total expenses over the previous 12 months, calculated quarterly and kept separate from reserve assets, assets satisfying regulatory capital requirements, and the issuer’s other assets. The OCC can increase operational backstop requirements commensurate with the covered PPSI’s business model and risk profile.
If a covered PPSI fails to meet applicable capital or operational backstop requirements at the end of any quarter, it would generally be prohibited from issuing any net new payment stablecoins. If a covered PPSI fails to meet requirements for two consecutive quarters, it would also be required to begin liquidating its reserve assets and redeeming its outstanding stablecoins and would be prohibited from charging customers a fee for redeeming their stablecoins.
Custody
The proposal would also implement the Act’s requirements for custody of payment stablecoin reserves, payment stablecoins used as collateral, or private keys by any national bank, federal savings association, U.S. branch of a foreign bank, or covered PPSI. The proposal also defines what constitutes “covered assets” for purposes of custodial and safekeeping services and identifies the “covered customer” that holds those assets with a custodian.
In developing rules implementing the Act’s custody requirements, the OCC states that its intention is to “set minimum principles-based requirements for OCC-supervised institutions related to their provision of custodial or safekeeping services.” The proposal specifies that:
- Appropriate steps to protect covered assets from the claims of the covered custodian’s creditors would include adopting, implementing, and maintaining written policies, procedures, and internal controls that are adequate to comply with applicable law and that are commensurate with the covered custodian’s size, complexity, and risk profile and with the nature of the applicable covered assets for which it provides custodial or safekeeping services.
- A covered custodian would need to maintain possession or control of covered assets and, subject to certain conditions, may maintain the covered assets through the use of a sub-custodian.
- A covered custodian would be considered in control of any payment stablecoin or stablecoin reserve in the form of a tokenized asset if it can reasonably demonstrate, consistent with the standard of care established by applicable law, that no other party, including the covered customer, can transfer the payment stablecoin or tokenized asset using a distributed ledger without the consent of the custodian or sub-custodian.
Application and Registration
The Act requires the OCC and other primary federal payment stablecoin regulators to render decisions on applications by entities seeking federal approval to issue stablecoins within 120 days after the application is substantially complete and prescribes the factors that regulators must consider when evaluating applications. It also requires the OCC to act on registrations by foreign stablecoin issuers within 30 days of receiving the registration and prescribes the reasons why registrations can be denied, including if the Secretary of the Treasury has not determined that a foreign issuer’s country has a regulatory and supervisory regime comparable to the regime established by the Act. Consistent with the Act, the proposal mandates application requirements for OCC-supervised institutions and registration requirements for foreign stablecoin issuers.
Other Matters
The proposal also describes the calculation of periodic, examination, and special supervisory assessment fees on covered PPSIs, as well as rules for information security, business continuity, affiliate transactions, service provider oversight, audit, and other general risk management principles and requirements that covered PPSIs would be required to satisfy. The OCC explains that the proposal is intended to address all the regulations the OCC is required to promulgate under the Act other than those related to the Bank Secrecy Act, anti-money laundering, and Office of Foreign Assets Control sanctions, which the OCC plans to address in a separate rulemaking in coordination with the Department of the Treasury.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Services team.
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