US Moves to Regulate Stablecoins

The new Office of the Comptroller of the Currency (OCC) rules are the first comprehensive federal framework for stablecoin issuers, implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act signed into law in July 2025. The public has until May 1, 2026, to comment on the proposed regulations, which are expected to take effect by early 2027. This move provides a pathway for entities to become "permitted payment stablecoin issuers" (PPSIs). For quantitative finance professionals, the proposed capital requirements are specific. A newly approved stablecoin issuer must maintain a minimum capital of $5 million or a higher amount set by the OCC. In addition, issuers are required to hold an "operational backstop" in highly liquid assets equivalent to their total operating expenses over the past 12 months, calculated quarterly. This is separate from the reserves backing the stablecoin. The rules propose two options for reserve diversification to manage risk. One option includes a "safe harbor" with quantitative limits, such as requiring at least 10% of reserves to be in assets with daily liquidity and 30% with weekly liquidity. Under both proposed approaches, the weighted average maturity of the reserve portfolio is capped at 20 days. For larger issuers with over $25 billion in outstanding stablecoins, a portion of their reserves must be held in insured bank deposits. Data transparency is a core component of the new regulations, creating new opportunities for data analysis and risk modeling. Issuers will be required to publish monthly, publicly-available reports on the composition and value of their reserves. They must also submit confidential weekly and quarterly reports to the OCC, similar to the Call Reports filed by traditional banks. SoFi's new stablecoin, SoFiUSD, is the first to be issued by a U.S. nationally chartered and insured bank on a public, permissionless blockchain. This venture is powered by BitGo's "Stablecoin-as-a-Service" platform, which provides the underlying technology, including smart contracts, custody, and compliance infrastructure for minting and burning the tokens. A significant point of contention in the proposed rules is the strict prohibition on paying any form of interest or yield to stablecoin holders. The OCC has extended this ban to include arrangements with affiliates and third parties, creating a "rebuttable presumption" that such payments would violate the law. This has been a major concern for the banking industry, which fears competition with traditional interest-bearing bank deposits. State-chartered stablecoin issuers that grow to have more than $10 billion in outstanding value will be required to transition to federal oversight by the OCC. They will have 360 days to comply with the federal framework or must cease issuing new stablecoins until their circulation drops below the threshold. The new regulations also establish a process for foreign stablecoin issuers to operate in the U.S. They must register with the OCC and their home country's regulatory regime must be deemed "comparable" to the U.S. framework by the Secretary of the Treasury. The OCC is required to decide on applications from foreign issuers within 30 days of receiving their registration.