OCC cuts minimum daily liquidity for stablecoin reserves to 5%
Key Facts
The U.S. Office of the Comptroller of the Currency (OCC) announced a final rule on October 21 to implement the GENIUS Act for payment stablecoin issuers. The rule cuts the minimum daily liquidity requirement from 10% to 5% of reserve assets, while keeping reserve and coverage requirements in place. The change replaces part of the quantitative requirements with stress tests and safeguards, according to the text published in the Federal Register. The rule takes effect on January 18, 2027. Comptroller of the Currency Jonathan Gould said the office is providing “a clear, practical framework for stablecoin innovation” with standards for reserves, redemption and risk management.
The rule covers permitted stablecoin issuers and foreign issuers subject to the office’s jurisdiction, as well as certain custody activities at entities it supervises. It requires issuers to ensure that the value of reserve assets at all times equals or exceeds the value of outstanding coins. The portfolio must also be able to support timely redemption under both normal and stressed conditions. To that end, the rule requires regular stress tests to verify that liabilities remain covered. The text clearly sets the testing standard: reserve assets must remain equal to or greater than the value of outstanding issuance even under stressed conditions.
Liquidity requirements are not limited to a set ratio; issuers must demonstrate that they can access and liquidate reserve assets to meet redemption requests. The assessment includes access to markets and funding channels, assumed discounts when selling assets, and operational readiness. The OCC says the final rule significantly eases quantitative requirements related to liquidity, diversification and concentration, replacing them with stress tests and safeguard requirements. On diversification, the office dropped a proposal that would have required some issuers to hold a specified amount of reserves in insured deposits. That does not eliminate the need to manage credit and concentration risks.
The rule allows repurchase agreements backed by Treasury bills with maturities of no more than 93 days to be included among permitted reserve assets. The OCC expects reserve rules could increase demand for short-term Treasury bills, since eligible liquid assets include bills maturing in 93 days or less. This links stablecoin coverage requirements to the short-term government debt market. By contrast, this round did not address changes to existing bank liquidity rules, including the liquidity coverage ratio and the net stable funding ratio. The OCC said those requirements were outside the scope of this rulemaking.
The rule was adopted after consultations that began when the OCC issued its proposal on March 2, 2026. The comment period closed on May 1, while the office continued to accept late comments through July 1. It received about 328 comments from cryptocurrency-related companies, trade groups, banks, nonprofits, academics and individuals. The OCC used an estimate of 39 permitted issuers in its economic analysis and said it does not expect any of them to require a Public Company Accounting Oversight Board review as a result of the final rule. This regulatory process provides context for the changes in the final version compared with the proposal.
The rule is also tied to the debate over yields that stablecoin holders may receive. According to the Associated Press, issuers remain barred from paying interest directly to holders, while platforms that hold the coins may be able to pass through yields on a case-by-case basis. Banks’ objections center on the possibility that customers’ money could move from bank deposits to cryptocurrency platforms, while consumer groups fear users may confuse these rewards with insured bank accounts. The American Bankers Association criticized the OCC’s decision, saying it threatens “the money banks use to make the loans that drive the U.S. economy.” The agency reported that the yield on USDC balances at Coinbase reaches 3.5%, compared with an average of 0.38% for traditional savings accounts.
Some elements of implementation remain for later regulatory steps. The OCC said Bank Secrecy Act, anti-money laundering and Office of Foreign Assets Control sanctions requirements will be addressed in separate rulemaking in coordination with the Treasury Department. It will also announce in a separate statement when it will begin accepting and processing license and exemption applications from those seeking to become permitted issuers. The agency plans to issue supervisory guidance and examination manuals as needed. The reserve and liquidity framework therefore takes effect in January 2027, while licensing procedures and some compliance requirements remain tied to later announcements and rules.