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PUBLIC SUBMISSION

As of: 5/5/26, 9:59 AM
Received: May 01, 2026
Status: Posted
Posted: May 05, 2026
Tracking No. mon-qe10-nwca
Comments Due: May 01, 2026
  Late comments are accepted
Submission Type: Web

Docket: OCC-2025-0372
Implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act for the Issuance of
Stablecoins by Entities Subject to the Jurisdiction of the Office of the Comptroller of the Currency
Comment On: OCC-2025-0372-0001
Guiding and Establishing National Innovation for U.S. Stablecoins Act for the Issuance of Stablecoins by
Entities Subject to the Jurisdiction of the Office of the Comptroller of the Currency
Document: OCC-2025-0372-0318
Institute of International Bankers

Submitter Information
Address: United States, 

Email: [email protected]
Submitter's Representative: Beth Zorc
Organization: Institute of International Bankers

General Comment
Please see the attached comment letter submitted on behalf of the Institute of International Bankers.

Attachments
Institute of International Bankers

file:///C/...mments%20for%20Relativity/Downloads%200301-0327/OCC-2025-0372-0318_Institute%20of%20International%20Bankers.html[5/5/2026 10:16:46 AM]

INSTITUTE OF INTERNATIONAL BANKERS
299 Park Avenue, 17th Floor
New York, N.Y. 10171
Telephone: (212) 421-1611
www.iib.org

May 1, 2026
VIA ELECTRONIC SUBMISSION
Office of the Comptroller of the Currency
Attn: Chief Counsel’s Office
400 7th Street, SW, Suite 1E-216
Washington, DC 20219
Re:

Comments on Proposed Rulemaking on Implementing the Guiding and
Establishing National Innovation for U.S. Stablecoins Act for the Issuance of
Stablecoins by Entities Subject to the Jurisdiction of the Office of the
Comptroller of the Currency (Docket: OCC-2025-0372; RIN: 1557-AF41)

To Whom It May Concern:
The Institute of International Bankers (“IIB”) welcomes the opportunity to submit this
letter in response to the notice of proposed rulemaking (the “NPR”) 1 published by the
OCC with respect to the implementation of the Guiding and Establishing National
Innovation for U.S. Stablecoins Act (the “GENIUS Act” or the “Act”). 2
The IIB represents the U.S. operations of internationally headquartered financial
institutions (“IHFIs”) from more than 35 countries around the world. The membership
consists principally of international financial institutions that operate branches, agencies,
bank subsidiaries and broker-dealer subsidiaries in the United States. 3 The IIB works to
1

Office of the Comptroller of the Currency (the “OCC”), Implementing the Guiding and Establishing
National Innovation for U.S. Stablecoins Act for the Issuance of Stablecoins by Entities Subject to the
Jurisdiction of the Office of the Comptroller of the Currency, 91 Fed. Reg. 10202 (Mar. 2, 2026),
available here.

2

Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub. L. No. 119-27, 139 Stat.
419 (2025) (codified at 12 U.S.C. §§ 5901 et seq.).

3

Most of our members qualify as foreign banking organizations (“FBOs”) that are subject to the Bank
Holding Company Act of 1956, as amended (the “BHCA”), pursuant to the International Banking Act
of 1978 (the “IBA”) and the Federal Reserve Board’s (the “FRB’s”) Regulation K. See 12 U.S.C.
§ 3108; 12 C.F.R. § 211.21(o). Some of our members, however, operate in the United States only
through nonbank and non-branch offices and subsidiaries and are not deemed subject to the BHCA.
We use the term IHFI in this letter to refer broadly to both categories and refer to foreign banks or
FBOs where appropriate for the specific issue being discussed.

ensure a level playing field for these institutions, which are an important source of credit
for U.S. borrowers. IHFIs comprise the majority of U.S. primary dealers, enhancing the
depth and liquidity of U.S. financial markets. They also contribute significantly to the
U.S. economy through the direct employment of U.S. citizens, as well as through other
operating and capital expenditures.
Between 2020 and 2024, the U.S. operations of IHFIs underwrote more than $11 trillion
in U.S. financing. 4 This represented more than 40% of the $28 trillion in U.S. financing
raised in the same period, including 36% of issuance done by U.S.-headquartered
companies. 5 In 2023 alone, the U.S. operations of IHFIs lent more than $1.3 trillion to
U.S. companies, including over $100 billion each to the technology and manufacturing
sectors, supported more than $2.3 trillion in trade finance volumes and managed
over $115 trillion in payments for U.S.-based companies or subsidiaries. 6 As such, IHFIs
have been, and will continue to be, vital contributors to the U.S. economy and financial
system, serving as an important conduit directing international funding to the United
States and facilitating cross-border payment and settlement activity.
Our members are active in every major financial center worldwide and include
institutions that are at the forefront of banking system innovation involving payments,
digital assets and stablecoins. Incorporating them into the U.S. stablecoin market is
critical to facilitating the seamless integration of the U.S. and global stablecoin markets
with the traditional global financial system. If done correctly, their integration will help
promote the United States as a global leader in stablecoins and digital assets and deepen
the markets for U.S. dollars and U.S. Treasuries that serve as reserve assets for U.S.
dollar-denominated payment stablecoins.
The IIB appreciates this opportunity to provide its input on the NPR. We recognize that
the OCC shares responsibility for implementing the GENIUS Act with the Department of
the Treasury (“Treasury”) and other federal regulators, including the FRB, the Federal
Deposit Insurance Corporation (the “FDIC”), and the National Credit Union
Administration (together with the FRB, FDIC and OCC, the “Primary Federal Payment
Stablecoin Regulators”), and that not every issue relevant for IHFIs is within the OCC’s
rulemaking authority. Our comments in this letter build upon the comments we provided
to Treasury in response to Treasury’s advance notice of proposed rulemaking with

4

See Press Release, New IIB Study Shows Vital Role of International Banks in U.S. Economy (Nov. 21,
2024), available here. The study referenced in the Press Release is available here.

5

See id.

6

See id.

2

respect to the implementation of the GENIUS Act 7 and are focused on issues of
particular relevance to IHFIs that are raised by the OCC’s NPR.
I.

SUMMARY OF KEY RECOMMENDATIONS

Our key recommendations on the NPR are summarized below.
Ensuring Equal Treatment for the U.S. Operations of Foreign Banks and IHFIs

7

•

Permitted payment stablecoin issuers (“PPSIs”) should be permitted to hold
reserves as demand deposits at the (insured and uninsured) U.S. branches of
foreign banks and to use uninsured deposits, including those held at uninsured
U.S. branches of foreign banks, to meet operational backstop requirements. (See
Sections III.A.1-2)

•

When acting as a custodian for payment stablecoins and payment stablecoin
reserves, the U.S. branches of foreign banks should be treated equally to other
U.S. insured depository institutions, including with respect to commingling
reserves in an omnibus account and holding cash reserves and related cash
custody assets in the form of a deposit liability. (See Section III.A.3)

•

The U.S. operations of IHFIs should qualify as U.S. financial institutions for
purposes of any reserve localization requirements, including under
Section 18(a)(3) of the Act. (See Section III.A.4)

•

The U.S. branches of foreign banks should benefit from the preservation of
authority in Section 16 of the Act to the same extent as other banking institutions.
(See Section III.A.5)

•

Foreign banks should be allowed the same flexibility as U.S. bank holding
companies (“BHCs”) to establish U.S. subsidiaries licensed as federal qualified
payment stablecoin issuers under the “nonbank entity” prong of that definition
and as permitted payment stablecoin issuers under the “subsidiary of an insured
depository institution” prong of that definition. (See Section III.A.6)

•

When reviewing applications to establish PPSI subsidiaries of FBOs and other
IHFIs, the OCC should give due regard to the U.S. federal regulatory framework
that already applies to the IHFI’s U.S. operations. (See Section III.A.7.a)

Treasury, GENIUS Act Implementation, 90 Fed. Reg. 45159 (Sept. 19, 2025) (the “Treasury
ANPR”), available here; IIB, Comment Letter on the Treasury ANPR (Nov. 4, 2025) (the “IIB ANPR
Letter”), available here.

3

•

Risk management standards and capital requirements for PPSIs controlled by
IHFIs should be flexible enough to accommodate a range of legal and governance
structures of foreign-owned PPSIs, including variations that reflect differences in
home-country regulations and practices. (See Sections III.A.7.b-c)

Registration and Regulation of Foreign Payment Stablecoin Issuers (“FPSIs”)
•

Subpart D of the NPR should be revised to more closely reflect the statutorily
specified role the OCC has with respect to the substantive regulation of FPSIs,
while continuing to preserve the OCC’s supervisory oversight of FPSIs. (See
Section III.B.1)

•

The OCC should tailor its supervisory, examination and reporting requirements
regarding the non-U.S. activity of FPSIs to what is reasonably necessary to
monitor the FPSI’s U.S. payment stablecoin activity and its compliance with the
GENIUS Act, including U.S. reserve sufficiency, and any U.S. financial stability
or illicit finance risks. (See Section III.B.2)

•

The OCC should adopt a flexible, principles-based approach to estimating U.S.
customer liquidity demands for FPSIs. (See Section III.B.3)

•

FPSI assessments should be appropriately calibrated to reflect the scope of their
U.S. operations and the OCC’s narrower scope of supervisory responsibilities for
FPSIs as compared to PPSIs. (See Section III.B.4)

•

The OCC should coordinate a statement with Treasury recognizing that FPSIs
permitted to issue in the United States through a comparability determination and
satisfaction of Section 18 should be entitled via field preemption under the
GENIUS Act to the same scope of preemption over state licensing, chartering and
authorization to do business requirements that federally qualified PPSIs receive
under Section 5(h). (See Section III.B.5)

Ensuring a Vibrant U.S. Market for Non-U.S. Dollar Payment Stablecoins
•

If Treasury does not use its interpretive and rulemaking authority under the
GENIUS Act to address reserve asset requirements for non-U.S. dollar payment
stablecoins, the OCC should use its authority to tailor such requirements to
accommodate PPSIs that issue non-U.S. dollar payment stablecoins. PPSIs that
issue non-U.S. dollar payment stablecoins should also be expressly permitted to
use traditional foreign exchange (“FX”) risk-mitigation strategies. (See Sections
III.C.1-2)

4

Application and Reporting Forms
•

II.

In order to give markets a meaningful opportunity to comment on the full scope
and requirements of Part 15, the OCC should publish proposed application and
reporting forms for public review and comment. (See Section III.D.1)
OVERARCHING PRINCIPLES
A.

Ensuring Equal Treatment for the U.S. Operations of Foreign Banks
and IHFIs

The principles of national treatment and equality of competitive opportunity for the U.S.
operations of foreign banks have been enshrined in U.S. banking law and policy for
decades. 8 Under these principles, U.S. banking policy “generally gives foreign banks
operating in the United States the same powers as U.S. banking organizations and
subjects them to the same restrictions and obligations.” 9 For the federal branches and
agencies of foreign banks, the IBA generally requires that the “operations of a foreign
bank at a Federal branch or agency shall be conducted with the same rights and privileges
as a national bank at the same location and subject to all the same duties,” 10 and to the
extent possible the OCC seeks to apply the same standards, policies and procedures to
federal branches and agencies as it does to national banks. 11 The rights and privileges of
state-licensed branches of foreign banks, which also benefit from the principle of national
treatment under federal law, are generally co-extensive with federal branches, except
8

See, e.g., IBA, Pub. L. No. 95-369, 92 Stat. 607 (1978) (codified at 12 U.S.C. § 3101 et seq.); S. Rep.
No. 1073, 95th Cong. 2d Sess. 2 (1978), reprinted in 1978 U.S.C.C.A.N. 1421 (explaining that the
guiding principle of the IBA is “the principle of parity of treatment between foreign and domestic
banks in like circumstances”—i.e., “national treatment”); FRB, SR Letter 08-9 (Oct. 16, 2008)
[hereinafter SR Letter 08-9] (explaining that the IBA “introduced a policy of national treatment
promoting competitive equality between FBOs operating in the United States and domestic banking
organizations.”). See also, e.g., Section 165(b)(2)(A) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, § 5365(b)(2)(A) (requiring the FRB to “give due regard to the principle of
national treatment and equality of competitive opportunity” when applying enhanced prudential
standards to foreign banking organizations); Section 103 of the Gramm-Leach-Bliley Act of 1999, 12
U.S.C. § 1843(l)(3) (directing the FRB to “apply comparable capital and management standards to a
foreign bank that operates a branch or agency or owns or controls a commercial lending company in
the United States, giving due regard to the principle of national treatment and equality of competitive
opportunity.”).

9

SR Letter 08-9 at n. 3.

10

Section 4(b) of the IBA, 12 U.S.C. § 3102(b).

11

See Comptroller’s Handbook, Federal Branches and Agencies Supervision, at 4 (version 1.5, Sept. 30,
2019) [hereinafter, the Comptroller’s Handbook]. See also 68 Fed. Reg. 70691 (Dec. 19, 2003)
(discussing the principles of national treatment under the IBA); CSBS v. Conover, 715 F.2d 604, 616
(D.C. Cir. 1983) (“the IBA seeks to treat federally chartered foreign and domestic banks as similarly
as possible under the Act”), cert denied, 466 U.S. 927 (1984).

5

where state law is more restrictive. 12 These principles are “designed to foster competitive
equality between foreign and domestic banks” by ensuring that the U.S. operations of
foreign banks are regulated and supervised on terms comparable to those applied to
domestic institutions. 13 Congress intended these principles of equal treatment to apply in
the context of the GENIUS Act. 14
The IIB urges the OCC to adhere to the longstanding commitment of the United States to
these principles in its rulemaking and interpretation of the GENIUS Act, as well as in
exercising its supervisory authority under the GENIUS Act. Observing national treatment
supports robust competition, market liquidity and diversified sources of credit for U.S.
households and businesses. It enhances financial stability by encouraging internationally
active firms to maintain efficient, well-capitalized and well-supervised U.S. platforms
rather than fragmenting operations or retrenching from U.S. markets in response to
duplicative or discriminatory rules. It also reinforces U.S. leadership in global financial
markets and the strength of the U.S. dollar by linking U.S. financial and banking markets
to the global networks of IHFIs. Establishing a level playing field in the United States for
IHFIs to participate in the U.S. payment stablecoin market—both as bankers and
custodians to issuers, and as issuers themselves—will further the Administration’s goals
of “reassert[ing] global leadership in digital assets” and encouraging stablecoin firms to
“onshore their activities in the United States.” 15
Consistent with these principles, the OCC should ensure that its regulations allow the
U.S. operations of IHFIs to participate in the U.S. payment stablecoin market to the same
extent, and subject to the same or equivalent rules, as domestic banks and financial
institutions. In particular, and as set forth in more detail below, the OCC’s regulations

12

See, e.g., 12 U.S.C. § 3105(h)(1) (limiting the powers of a state branch to those of a federal branch);
12 C.F.R. § 211.29 (procedures for a state branch to apply for broader powers than a federal branch).
See also, e.g., 66 Fed. Reg. 54346, 54370-54372 (FRB sought to advance the principle of national
treatment when it liberalized rules around foreign banks maintaining branches in more than one state
to reflect expanded domestic bank interstate branching powers under the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994); SR Letter 08-9.

13

Comptroller’s Handbook at 4.

14

See Cong. Rec. Vol. 171 No. 123 (July 17, 2025), H3405-27, 3423 (statement of Rep. Andy Barr)
(“Barr Speech”), available here (“The GENIUS Act provides that all appropriately regulated banks,
including the U.S. operations of foreign banking organizations, which are supervised by the Federal
Reserve, are treated equally to their U.S. peers. This is particularly important with respect to the
issuance, reserve and custody services, and bank capital requirements irrespective of whether they are
deposit insured since the act prohibits stablecoins from being covered by FDI insurance.”).

15

President’s Working Group on Digital Asset Markets, Strengthening American Leadership in Digital
Financial Technology, at 59 (July 30, 2025) (“PWG Report”), available here.

6

should address the following points, which follow from the text of the GENIUS Act and
congressional intent to ensure equal treatment for the U.S. operations of IHFIs. 16
•

The permitted activities of uninsured U.S. branches of foreign banks should be
equal to those of domestic insured depository institutions, including with respect
to holding payment stablecoin reserves, accepting deposits from PPSIs as part of
reserve assets or for operational backstop or other purposes, and providing
custody and safekeeping services (on either a segregated or commingled basis).

•

Consistent with how the OCC is proposing to define depository institution in the
NPR, the OCC should acknowledge that foreign banks and other IHFIs are
permitted to establish U.S.-domiciled subsidiaries as nonbank entities eligible for
approval as federal qualified payment stablecoin issuers under Section 5 of the
Act.

•

U.S. branches of foreign banks should be permitted to establish U.S. subsidiaries
eligible to be licensed as a PPSI to the same extent, and under the same
conditions, as domestic insured depository institutions.
B.

The Importance of Ensuring Foreign Issuer Access to U.S. Market
Through Comparability Determinations and Tailored Supervision of
FPSIs’ U.S. Activities

Section 18 of the GENIUS Act authorizes FPSIs to issue payment stablecoins in the
United States if Treasury determines the FPSI is subject to regulation and supervision
under a foreign regime that is “comparable to the requirements established” under the
GENIUS Act, “including [ ] the requirements under section 4(a)” of the Act. 17 As a
further condition for such access, Section 18 also requires an FPSI to register with the
OCC and hold reserves in a U.S. financial institution sufficient to meet liquidity demands
of U.S. customers unless otherwise permitted under a reciprocal arrangement established

16

See also IIB ANPR Letter at 12-14.

17

GENIUS Act, Section 18(a). Section 4(a) sets out principles for the regulation of PPSIs in the United
States, covering, among other things, reserve composition, disclosure and audit requirements, capital,
liquidity, asset diversification and risk management requirements, Bank Secrecy Act, anti-money
laundering and sanctions compliance, activity and marketing limits, and the prohibition on interest
payments. Section 3 of the GENIUS Act also permits digital asset service providers (“DASPs”) to
offer and sell such FPSI payment stablecoins to U.S. persons. GENIUS Act, Section 3(b).

7

pursuant to Section 18(d). 18 The Act vests responsibility for registration and ongoing
monitoring of FPSIs with the OCC. 19
This division and ordering of statutory responsibilities is important and contrasts with the
licensing and regulation of PPSIs. Treasury first determines whether the foreign
regulatory and supervisory regime is comparable, and the OCC then acts within the
specific registration and ongoing monitoring roles that Congress assigned to it. This
includes the authority to rescind a registration for noncompliance with applicable
provisions of the GENIUS Act in consultation with Treasury. The OCC’s rulemaking
authority with respect to FPSIs specifically applies to “issu[ing] rules relating to the
standards for approval of registration requests and the process for appealing denials of
such registration requests.” 20 Treasury is charged more broadly with rulemaking “to carry
out [Section 18].” 21
Section 18(c) of the Act is important not only for what it authorizes, but also for what it
does not. The OCC’s role does not extend to evaluating the quality of an FPSI’s homecountry regulation, and it should not be necessary for the OCC to create any new
requirements in the FPSI registration process beyond what is required by the Act. 22 Once
Treasury has been satisfied and made a comparability determination, the Act has already
established the basis for federal treatment of the FPSI, and the OCC should defer to
Treasury and make registration determinations on the basis of the enumerated statutory
factors. 23 Similarly, it should not be necessary for the OCC to supervise an FPSI outside
of the specific statutory factors that the OCC is required to evaluate, 24 and the OCC
should not seek to establish new substantive requirements for FPSIs or assert greater
supervisory authority than what is needed to carry out its statutory duties.
U.S. dollar-denominated payment stablecoins issued overseas serve to extend the global
market for U.S. dollars and U.S. Treasuries. We urge the OCC to exercise its supervisory
authority over FPSIs in a tailored way that encourages access to U.S. markets for
appropriately regulated FPSIs, while also allowing it to satisfy its statutory mandate to
18

In addition, the issuer cannot be domiciled or regulated by a country subject to comprehensive
economic sanctions by the United States or in a jurisdiction that the Secretary of the Treasury has
determined to be a jurisdiction of primary money laundering concern.

19

See GENIUS Act, Section 18(c)(1)-(3).

20

GENIUS Act, Section 18(c)(1)(E).

21

GENIUS Act, Section 18(b)(6).

22

See GENIUS Act, Section 18(c)(1)(C).

23

See id.

24

The statutory factors are limited to monitoring for compliance with the GENIUS Act, including with
respect to “maintaining insufficient reserves or posing an illicit finance risk or financial stability risk.”
See GENIUS Act, Section 18(c)(3)(A).

8

monitor the U.S. activities of FPSIs for compliance with law, reserve adequacy, illicit
finance and financial stability risks. To this end, the OCC should adopt guiding principles
in its final rule clarifying that supervisory requests relating to non-U.S. operations will be
confined to what is reasonably necessary to assess compliance with the GENIUS Act
provisions applicable to FPSIs and that its supervisory authority will be exercised in a
manner that is proportionate and tailored to the activities of FPSIs in the United States.
C.

Establishing a Vibrant U.S. Market for Non-U.S. Dollar Payment
Stablecoins

Non-U.S. dollar payment stablecoins are expected to have significant utility for U.S.
persons. Potential use cases include FX trading, settlement of transactions in non-U.S.
dollar-denominated tokenized securities, accepting payment on non-U.S. dollardenominated tokenized trade receivables, cross-border payments and other international
transactions.
The definition of payment stablecoin in the GENIUS Act, however, raises serious
questions for U.S. persons that wish to access stablecoins denominated in currencies
other than U.S. dollars. This is because, if given a broad construction, the definition
would include stablecoins pegged to non-U.S. currencies, while the reserve requirements
in Section 4(a)(1) of the Act appear to permit only U.S. dollar assets to serve as reserves
for payment stablecoins, with the potential exceptions of foreign currency deposit
accounts and money received in cross-currency repos. 25
This asset-liability mismatch creates a fundamental conflict for PPSIs that will increase
the risk and cost of issuing non-U.S. dollar payment stablecoins in the United States.
Unless addressed, it could make it impractical for a PPSI to issue such payment
stablecoins in the United States. At a minimum, it would introduce significant operational
risks on PPSIs required to use potentially complicated derivatives strategies to hedge the
risk of the mismatch between the currency in which the token is denominated and its U.S.
dollar-denominated reserves, and it would impose significant costs on issuers and users.
If the U.S. framework leaves this issue unresolved, non-U.S. dollar stablecoin activity is
likely to remain exclusively offshore, where there can be more workable reserve
treatment for non-U.S. dollar products. This could lead to fragmentation of stablecoin
25

See GENIUS Act, Sections 2(17)-(19), 2(22) & 4(a)(1)(A). With the exception of demands deposits at
insured depository institutions, which could include foreign currency deposit accounts, and “money”
received on overnight repos backed by short-term Treasuries, permitted reserve assets under Section
4(a)(1)(A) and NPR § 15.11(b) include only U.S. dollar-denominated assets—United States coins and
currency, Federal Reserve Bank account balances, funds held as demand deposits at insured
depository institutions, short-term Treasury bills, notes and bonds (owned or borrowed under reverse
repurchase agreements), money market fund shares invested in U.S. government obligations,
“similarly liquid” federal government-issued assets approved by the issuer’s Primary Federal Payment
Stablecoin Regulator and tokenized versions of permitted reserve assets.

9

markets as more non-U.S. and (potentially) U.S. dollar payment stablecoin activity
develops outside the United States.
In the IIB ANPR Letter, we urged Treasury to use its broad rulemaking and interpretive
authority under the GENIUS Act to resolve this issue, including by highlighting the
importance of allowing non-U.S. dollar-denominated stablecoins issued by FPSIs to have
access to the U.S. market. If Treasury determines it is unable or unwilling to do so, the
OCC and the other Primary Federal Payment Stablecoin Regulators should address the
currency mismatch issue through their authority to tailor and differentiate prudential
requirements among issuers under Section 4(a)(4)(B) or other relevant rulemaking
authorities under the GENIUS Act.
III.

KEY RECOMMENDATIONS
A.

Ensuring Equal Treatment for the U.S. Operations of Foreign Banks
and IHFIs
1.

PPSIs should be permitted to hold reserves as demand deposits at
the (insured and uninsured) U.S. branches of foreign banks

To give effect to congressional intent and the principles of national treatment and
equality of competitive opportunity, and to diversify the number of eligible U.S.regulated providers of demand deposits for payment stablecoin reserves, the OCC should
clarify in its final rule that PPSIs may place reserves as demand deposits with the
uninsured U.S. branches of foreign banks. 26 This issue, and several other issues of equal
treatment raised in this Section III.A, should be addressed by interpreting the GENIUS
Act’s ambiguous definition of insured depository institution to include the uninsured U.S.
branches of foreign banks.
Section 4(a)(1) of the Act permits PPSIs to hold reserves as demand deposits at insured
depository institutions 27 and defines insured depository institutions, in relevant part, by
reference to Section 3 of the Federal Deposit Insurance Act (“FDI Act”). 28 Section 3 of
the FDI Act defines the scope of insured depository institutions in two ways, depending
on the context, and expressly includes the uninsured U.S. branches of foreign banks as

26

For the avoidance of doubt, we would expect similar treatment for FPSI reserves required to be held
in the United States.

27

GENIUS Act, Section 4(a)(1)(A).

28

GENIUS Act, Section 2(15) (“The term ‘insured depository institution’ means— (A) an insured
depository institution, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
and (B) an insured credit union”).

10

“insured depository institutions” for purposes of the FDI Act’s enforcement provisions. 29
The GENIUS Act does not specify which of the two definitions should be used. 30
The NPR does not acknowledge this ambiguity. Instead, the proposed definition of
insured depository institution in NPR § 15.2 appears to adopt the narrower reading by
adding a specific reference to 12 U.S.C. § 1813(c)(2), a reference that does not appear in
the GENIUS Act itself. 31 The OCC appears to have proposed this narrower definition
without detailing the analytical steps it may have employed to get there. In particular, the
NPR does not include any discussion of how the structure and purpose of the GENIUS
Act, or its legislative history, would resolve this ambiguity.
The impact is material, as the narrow reading would exclude the uninsured branches of
foreign banks from the definition of “insured depository institution” and, therefore, from
the ability to serve as a deposit provider to PPSIs, which would be in sharp departure
from the principles of national treatment and equality of competitive opportunity, and
contrary to the available legislative history. Representative Barr addressed this specific
issue in his floor speech upon passage of the GENIUS Act, stating that equal treatment of
FBOs and U.S. banks “is particularly important with respect to . . . reserve and custody
services . . . irrespective of whether they are deposit insured . . . .” 32
We believe that a narrow reading of the insured depository institution definition also
misconstrues the purpose of this requirement in the GENIUS Act. In our view, the
requirement is intended to identify banking institutions subject to robust federal
supervision where demand deposits can be placed. It does not aim for those institutions to
necessarily carry deposit insurance (the narrower definition of Section 3(c)(2) of the FDI
Act), because, in light of deposit insurance limits, requiring deposit insurance would not
achieve a noticeably greater level of protection for holders of payment stablecoins but
would interfere with the principle of equality of competitive opportunity.

29

Compare 12 U.S.C. §§ 1813(c)(2) and (3). See also 12 U.S.C. § 1818. Insured U.S. branches of
foreign banks are included in both definitions.

30

See GENIUS Act, Section 2(15) (referring to “an insured depository institution, as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813),” without reference to the specific
subparagraph).

31

Compare NPR § 15.2 (“An insured depository institution, as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. § 1813(c)(2))”) with GENIUS Act, Section 2(15) (“an insured
depository institution, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)”).

32

Barr Speech at 3423 (emphasis added). See also Section 4(b) of the IBA; 12 U.S.C. § 3102(b)
(“[O]perations of a foreign bank at a Federal branch or agency shall be conducted with the same rights
and privileges as a national bank at the same location and shall be subject to all the same duties,
restrictions, penalties, liabilities, conditions, and limitations that would apply under the National Bank
Act to a national bank doing business at the same location”); notes 8-14 and accompanying text.

11

Except for a limit on retail deposit taking and the related availability of deposit insurance
of up to $250,000 per depositor, the uninsured U.S. branches of foreign banks are eligible
to accept deposits to the same extent as insured U.S. banks. This includes accepting
institutional deposits, including those from payment stablecoin issuers. U.S. branches of
foreign banks are subject to the same type of federal safety and soundness examination
and oversight, and the same enforcement powers under Section 8 of the FDI Act, as U.S.
banks, and, like U.S. banks, they are eligible to borrow from the FRB’s discount window
under applicable law and FRB regulations. 33 If Congress had intended to override
longstanding practices that allow foreign banks operating through uninsured state or
federal branches to compete fairly in the areas of banking and custody, we believe it
would have done so expressly.
The NPR includes a series of questions that request comment on potential requirements
to spread deposits among a broad range of institutions to maximize deposit insurance
coverage. 34 We do not believe that such an approach is supported by the GENIUS Act.
The GENIUS Act requires the OCC to issue reserve asset diversification standards,
including deposit concentration at “banking institutions” (without reference to deposit
insurance), and interest rate risk management standards applicable to PPSIs. 35 Notably,
however, these requirements must “not exceed standards that are sufficient to ensure the
ongoing operations of permitted payment stablecoin issuers” and must be tailored to their
business model and risk profile. 36 This is appropriately implemented in NPR
§ 15.13(a)(8), which provides that a PPSI must “manage liquidity and concentration risk
in a manner that is appropriate to [its] business model and risk profile.” 37
PPSIs are best positioned to ensure their ongoing operations through careful counterparty
credit risk management, which should include assessment of a bank’s capital, liquidity
management and the sufficient size of a bank’s balance sheet. Among the foreign banks
operating in the United States through uninsured branches are firms with some of the
highest levels of capitalization, subject to some of the strictest liquidity requirements, and
33

See 12 C.F.R. § 201.1 (extending rules relating to eligibility for Federal Reserve Bank lending to
“United States branches and agencies of foreign banks”).

34

See, e.g., Question 63 on other measures to encourage PPSIs to hold reserve assets as insured
deposits; Question 64 on how to calibrate the insured deposit requirement for PPSIs; Question 65 on
potential other measures to spread insured deposits throughout the banking system; Question 67 on
whether large PPSIs should be required to hold all of their required deposits reserves as insured
deposits; Question 68 on whether PPSIs should be required to hold at least 20% of their required
reserve assets as insured deposits at smaller insured depository institutions (<$30 billion); and
Question 70 on whether to create a quantitative limit on the maximum amount of uninsured demand
deposits that PPSIs can maintain at any single insured depository institution.

35

GENIUS Act, Section 4(a)(4)(A)(iii).

36

Id.

37

NPR § 15.13(a)(8).

12

offering among the largest balance sheets in the world. This makes them eminently
suitable candidates for consideration as bank counterparties under the Act’s reserve asset
diversification criteria. If the OCC were to include additional conditions requiring the use
of insured deposits in its final rule, it would both deprive PPSIs of the ability to place
demand deposits with the uninsured U.S. branches of those foreign banks and exceed the
Act’s standard of diversification “sufficient to ensure” a PPSI’s ongoing operations. 38 In
addition, requiring some portion, or even all, of a PPSI’s reserve assets to be held as
insured deposits would elevate deposit insurance as a relevant marker of reserve
eligibility even though the Act makes it clear that payment stablecoins themselves must
not be presented as insured products. 39
There is relevant recent precedent for the broader reading of insured depository
institution in other statutory contexts where the principles of national treatment and
equality of competitive opportunity and congressional intent both favor the broader
reading. For example, in the context of the “swap push out” provision in Section 716 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“DoddFrank”), 40 the FRB concluded that the statutory exemption available to “insured
depository institutions” was ambiguous and should be read to include (and provide the
same exceptions and transition period relief for) the uninsured U.S. branches and
agencies of foreign banks. 41
Consistent with the Act’s text and structure, congressional intent and public policy, and
the principles of national treatment and equality of competitive opportunity, we urge the
OCC to adopt the broader definition of insured depository institution, which includes
38

As a matter of public policy, the U.S. branches of foreign banks can provide an important additional
source of diversification. The U.S. branches of foreign banks also contribute significantly to U.S.
lending (see most recent FRB-published data here). As the U.S. payment stablecoin market grows,
demand for U.S. dollar deposit capacity to hold reserves will grow, and PPSIs and FPSIs will have to
avoid overconcentration of deposits in a few institutions to meet their risk management-driven
diversification goals. The uninsured U.S. branches of foreign banks, which are subject to robust
supervision and regulation both in the United States and their home countries—with access to
emergency U.S. dollar liquidity through the FRB’s discount window—are well placed to contribute to
the needed diversification.

39

See GENIUS Act, Section 4(e).

40

12 U.S.C. § 8305.

41

See 79 Fed. Reg. 340 (Jan. 3, 2014). In part, the FRB based its interpretation on the fact that, while the
definition of insured depository institution in Section 3(c)(2) of the FDI Act does not include
uninsured branches, Section 3(c)(3) of the FDI Act provides that branches and agencies are included
for purposes of Section 8 of the FDI Act, which includes the FDI Act’s enforcement provisions. Id.
Section 716 of Dodd-Frank was subsequently amended by Congress to give uninsured branches and
agencies of foreign banks equal treatment to insured depository institutions. See Consolidated and
Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 630, 128 Stat. 2130 (2014)
§ 630.

13

Section 3(c)(3) of the FDI Act. 42 This should be achieved by amending § 15.2 of the
NPR to provide as follows:
“Insured depository institution means: (1) An insured depository institution, as
defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2))
including any uninsured U.S. branch of a foreign bank; and . . . .”
Defining insured depository institution in this way for purposes of the GENIUS Act
would elegantly address holding reserves as demand deposits, as well as the eligibility of
uninsured U.S. branches of foreign banks to provide custodial services and license
subsidiaries as PPSIs on equal terms to U.S. banks, as discussed below.
2.

PPSIs should be allowed to use uninsured deposits, including those
held at uninsured U.S. branches of foreign banks, to meet the
NPR’s proposed operational backstop requirement

NPR § 15.41(b) proposes to require a PPSI to hold a designated pool of highly liquid
assets equal to 12 months of expenses to maintain the ongoing operations of the PPSI
during a business disruption. Only a limited set of assets would be allowed to comprise
the operational backstop, including “[d]emand deposits . . . at a U.S. insured depository
institution, the balances of which are fully insured by the FDIC . . . .” 43
The operational backstop requirement is an OCC creation of rulemaking, not based on a
detailed statutory mandate. The OCC should expand the scope of permitted operational
backstop assets to include uninsured deposits, including those held at uninsured U.S.
branches of foreign banks. The purpose of the backstop is to ensure that funds are held
securely and are available quickly to support operations in a disruption, not to require that
all such balances be structured to maximize deposit insurance coverage. A rule that
excludes uninsured deposits altogether would be unnecessarily restrictive and could push
PPSIs into more complex cash-management arrangements such as reciprocal or other
types of deposit networks, which could pose additional operational risk. And as discussed
in Section III.A.1 above, the uninsured U.S. branches of foreign banks are subject to
robust federal prudential regulation and supervision equivalent to U.S. banks and should
be treated equally to other U.S. insured depository institutions. This can be achieved
through the use of the broader definition of insured depository institution as discussed in
Section III.A.1 above.

42

It should be noted that the inclusion of entities listed in Section 3(c)(3) would only lead to the
inclusion—as is appropriate—of uninsured U.S. branches of foreign banks. Agencies and commercial
lending companies of foreign banks could not participate in deposit taking or custody in the United
States due to their highly restricted authorities to do business in the United States.

43

NPR § 15.41(b)(2)(ii).

14

3.

When acting as a custodian for payment stablecoins and payment
stablecoin reserves, the U.S. branches of foreign banks should be
treated equally to other U.S. insured depository institutions

Section 10 of the GENIUS Act sets forth requirements for the provision of custodial
services or safekeeping services for payment stablecoin reserves, payment stablecoins as
collateral and the private keys used to issue permitted payment stablecoins. It authorizes
the U.S. operations of FBOs, including their U.S. branches, to provide such custodial and
safekeeping services. 44 The NPR would define all those custodians that are under the
OCC’s supervisory jurisdiction, including national banks, federal savings associations,
federal branches of foreign banks and OCC-regulated PPSIs, as “covered custodians” and
set standards for their custodial and safekeeping services.
We support the OCC’s decision to treat all covered custodians under the jurisdiction of
the OCC equally when it comes to the requirements for commingling reserves in an
omnibus account. 45 We urge the OCC to go further, however, and clarify in NPR
§ 15.21(d) that uninsured and insured federal branches are permitted to hold “covered
assets” that are in the form of cash “in the form of a deposit liability,” to the same extent
as insured national banks and federal savings associations. 46
GENIUS Act Section 10(c)(2)(D), which is the source of NPR § 15.21(d), provides that
any “insured depository institution” providing custodial or safekeeping services is
permitted “to hold payment stablecoin reserves in the form of cash on deposit provided
such treatment is consistent with Federal law.” 47 As explained above, the definition of
insured depository institution in the GENIUS Act has two possible readings, and we
believe that congressional intent, principles of national treatment and equality of
competitive opportunity, and public policy all support the broader reading that includes
uninsured branches. 48 Here again, deposit insurance is unlikely to be material to the
44

GENIUS Act, Section 10. Under Section 10(a), the U.S. operations of FBOs, including their U.S.
branches, are authorized to provide such custodial and safekeeping services by virtue of their
regulation by either the FRB (for state-licensed branches, state member bank subsidiaries and the
overall U.S. operations of a foreign banking organization), the OCC (for federal branches and national
bank subsidiaries) or other federal financial regulator (for other functionally regulated subsidiaries,
like broker-dealers regulated by the SEC).

45

NPR § 15.22(b).

46

See NPR § 15.21(d) (“[A]n insured national bank or Federal savings association that provides
custodial or safekeeping services, including as a sub-custodian, for covered assets that are in the form
of cash may hold such cash in the form of a deposit liability, provided such treatment is consistent
with Federal law.”)

47

GENIUS Act, Section 10(c)(2)(D).

48

Even within the scope of Section 10(c), the GENIUS Act uses both “depository institution” and
“insured depository institution” when discussing reserves held as deposit liabilities. See GENIUS Act,

15

safety of cash reserves custodied at either U.S. banks or the U.S. branches of foreign
banks, which are both subject to robust supervision and regulation and have access to
emergency U.S. dollar liquidity through the FRB’s discount window. The OCC should
adopt the broader definition discussed above, and, in applying it here, should clarify that
the federal branches of foreign banks (i.e., those branches under the OCC’s jurisdiction)
also benefit from this provision. 49
In order to reflect this change in the OCC’s regulations governing covered custodians, the
OCC should amend the NPR definition of insured depository institution as described in
Section III.A.1 above and should amend NPR § 15.21(d) as follows:
“(d) Holdings of cash. Notwithstanding any other provision of this section, an
insured national bank, Federal branch or Federal savings association that
provides custodial or safekeeping services, including as a sub-custodian, for
covered assets that are in the form of cash may hold such cash in the form of a
deposit liability, provided such treatment is consistent with Federal law.”
4.

The U.S. operations of IHFIs should qualify as U.S. financial
institutions for purposes of any reserve localization requirements,
including under Section 18(a)(3) of the Act

Section 18(a)(3) of the Act provides that an FPSI relying on a comparability
determination under Section 18 must hold “reserves in a United States financial
institution sufficient to meet liquidity demands of United States customers,” 50 and
Question 173 of the NPR asks whether the OCC should define U.S. financial institution
for these purposes.
The OCC should confirm that any institution located or organized in the United States
that is authorized under relevant state or federal law to provide custodial or safekeeping
services for payment stablecoin reserves should qualify as U.S. financial institutions for
purposes of Section 18 and any other localized reserve requirement introduced by the
OCC or other regulator. 51 This would include the U.S. branches and other U.S.
operations of FBOs, as well as U.S. broker-dealers and other functionally regulated U.S.
Section 10(c)(2)(A) (“[A]ny payment stablecoin reserves in the form of cash held in the form of a
deposit liability at a depository institution shall not be subject to any requirement relating to the
separation of such cash from the property of the applicable depository institution”).
49

Although state-licensed U.S. branches of foreign banks are not within the OCC’s jurisdiction, we note
that we believe the same interpretation should apply to them.

50

GENIUS Act, Section 18(a)(3).

51

See, e.g., NPR at Question 54 (“[S]hould the proposed rule require that stablecoins denominated in
United States dollars only be backed by demand deposits at U.S.-based depository institutions ( i.e.,
reserve assets could not include Eurodollar deposits)?”).

16

subsidiaries of IHFIs that are not FBOs but are authorized to provide such services under
state or federal law. 52
In many cases, this would involve separately incorporated or organized U.S. subsidiaries
of FBOs and of other IHFIs that are directly subject to regulation by a Primary Federal
Payment Stablecoin Regulator or a primary financial regulatory agency and U.S.
insolvency laws. There is no policy reason to treat such subsidiaries as different than
similarly regulated subsidiaries of U.S. BHCs or other financial firms. U.S. branches of
foreign banks are U.S. financial institutions, given their physical location in the United
States, their U.S. licensing and regulation and the broad U.S. state and federal laws ringfencing branch assets for the benefit of creditors located in a state or (for federal
branches) in the United States. 53
To address this point, we recommend the OCC add the following definition in NPR
§ 15.2:
“U.S. financial institution means any institution located or organized in the United
States that is authorized under relevant state or federal law to provide custodial or
safekeeping services for payment stablecoin reserves.”
5.

The U.S. branches of foreign banks should benefit from the
preservation of authority in Section 16 of the Act to the same extent
as other banking institutions

Section 16 of the Act includes a rule of construction that “[n]othing in this Act may be
construed to limit the authority of a depository institution, Federal credit union, State
credit union, national bank, or trust company to engage in activities permissible pursuant
to applicable State and Federal law . . . .” 54 By adopting the FDI Act definition of
52

We note that the U.S. operations of FBOs, including state-licensed branches, federal branches and
U.S. bank subsidiaries, are located in the United States and regulated under applicable federal or state
law. Similarly, although the U.S. operations of IHFIs that are not FBOs are not subject to FRB
umbrella supervision, their U.S. broker-dealers and other functionally regulated U.S. subsidiaries are
organized under U.S. law or located in the United States and regulated under applicable federal or
state law. Those U.S.-based entities therefore should qualify where they are authorized to provide the
relevant custodial or safekeeping services. All of these entities would also qualify as permitted
custodians for PPSIs under Section 10 of the Act.

53

See, e.g., 12 U.S.C. § 3102(j)(1) (noting, in the receivership context, that “whenever the Comptroller
shall become satisfied that such foreign bank is insolvent, he may . . . appoint a receiver who shall
take possession of all the property and assets of such foreign bank in the United States . . . .”); N.Y.
Banking Law § 606(4)(a) (noting that “[t]he superintendent may . . . take possession of the business
and property of the business and property in this state of any foreign banking corporation that has
been licensed by the superintendent” upon, inter alia, surrender or revocation of the corporation’s
license or liquidation).

54

GENIUS Act, Section 16(a).

17

depository institution, the NPR would helpfully clarify that this rule of construction also
applies to federal branches and insured branches. 55
6.

Foreign banks should be allowed the same flexibility as U.S. BHCs
to establish U.S. subsidiaries licensed as federal qualified payment
stablecoin issuers under the “nonbank entity” prong and as
permitted payment stablecoin issuers under the “subsidiary of an
insured depository institution” prong

The GENIUS Act provides multiple paths for an IHFI to establish a licensed PPSI. One
of those paths is the establishment of a nonbank entity, which is defined as “a person that
is not a depository institution or subsidiary of a depository institution,” but this use of
“depository institution” is not further defined under the Act. 56 The NPR would resolve
this ambiguity by adopting the FDI Act’s definition of depository institution as “any bank
or savings association,” 57 and the preamble to the NPR helpfully clarifies that a nonbank
entity could include “a non-subsidiary affiliate of a depository institution.” 58
This is relevant for U.S. BHCs, which can use this authority to set up licensed nonbank
issuers outside their bank chain. It is also relevant for foreign banks, which, consistent
with the definition of “depository institution” in the FDI Act, may establish U.S.
subsidiaries as licensed nonbank issuers so long as that entity is not a subsidiary of the
U.S. branch or of another U.S. bank entity of such foreign bank. 59 Such an entity would
obtain its issuer license from the OCC.
Furthermore, consistent with the insured depository institution definition discussed
above, and on par with their U.S. bank peers, an uninsured U.S. branch of a foreign bank
should be considered an insured depository institution under the GENIUS Act, and thus
eligible to establish a PPSI subsidiary licensed by the branch’s primary federal regulator,
providing another path for a foreign bank to establish a PPSI.
We appreciate that the NPR’s definition of permitted payment stablecoin issuer lists only
those entities that are subject to OCC supervision. However, we believe there is an
55

See Section III.A.6, below.

56

GENIUS Act, Section 2(20); NPR, 91 Fed. Reg. at 10205. Later in Section 11(g) of the Act, as the
NPR notes, a depository institution is defined in reference to the FDI Act. GENIUS Act,
Section 11(g).

57

12 U.S.C. § 1813(c)(1).

58

NPR § 15.2; NPR, 91 Fed. Reg. at 10208.

59

The FDI Act’s definition of depository institution includes “any bank or savings association.” 12
U.S.C. § 1813(c)(1). The FDI Act, in turn, defines “bank” as “any national bank and State bank, and
any Federal branch and insured branch.” 12 U.S.C. § 1813(a)(1). Foreign banks are not depository
institutions under this definition.

18

omission. To implement this second recommendation, the OCC should amend the
proposed definition of permitted payment stablecoin issuer in NPR §15.2 to include
federal branches as follows: 60
“Permitted payment stablecoin issuer means a person formed in the United States
that is a—(1) Subsidiary of an insured national bank, Federal branch or Federal
savings association that has been approved to issue payment stablecoins . . .”
7.

Application, risk management and capital standards for PPSIs
controlled by IHFIs should give due regard to existing U.S.
regulation of the IHFI and accommodate a range of legal and
governance structures
(a)

Standards for Reviewing PPSI Applications from IHFIs

When reviewing applications to establish PPSIs from FBOs and other IHFIs under NPR
§15.30, the OCC should give due regard to the U.S. federal regulatory framework that
already applies to the IHFI’s U.S. operations (including, for FBOs, U.S. federal safety
and soundness standards). An IHFI’s operation of a U.S. financial institution, whether it
be a bank or nonbank, that is subject to ongoing federal regulation and supervision in the
United States, should be a strong indicator that the IHFI parent has the requisite financial
and management resources, competence and integrity to operate a PPSI, and the OCC
should seek to rely on and defer to other regulatory approvals and supervisory materials
to the greatest extent possible. The U.S. operations of FBOs are subject to comprehensive
umbrella supervision and regulation by the FRB that is equivalent to the supervision and
regulation of domestic BHCs, except where structural differences or deference to
comparable home-country standards merit departure, and should be presumed to be
eligible to own a PPSI to the same extent as a domestic BHC.
(b)

Risk Management Standards

We support the OCC’s decision to propose flexible risk management standards for PPSIs
in NPR § 15.13, consistent with the GENIUS Act’s mandate that such standards be
“principles-based” and “tailored to the business model and risk profile” of a PPSI. As the
OCC moves forward to implement and enforce these flexible standards, it should take
into account the variety of legal and governance structures a PPSI may have, including
60

Federal branches of foreign banks, whether insured or uninsured, should be separately listed in this
definition because they are subject to OCC supervision and are insured depository institutions. By
listing them here, their subsidiaries can become PPSIs. This is irrespective of the fact that federal
branches are separately mentioned under the definition of “federal qualified payment stablecoin
issuer” in their own capacity, offering an additional issuer path for those branches. Our suggestion
makes explicit what is currently implicit in the NPR: issuance by a subsidiary of a federal branch is
achieved under Section 2(23) of the GENIUS Act, while direct issuance by a federal branch is
achieved under Section 2(11), which defines a federal qualified payment stablecoin issuer.

19

for foreign-owned or controlled PPSIs, that reflect differences in home country
regulations and practices.
For example, in recognition of the variety of legal structures a PPSI could have, the NPR
helpfully defines board of directors to include a board of directors or other “group of
individuals that serve the nearest equivalent function of acting as the governing body” of
the PPSI or applicant. 61 Because federal branches are not separately governed legal
entities, a federal branch licensed as a PPSI should be permitted to substitute a U.S.
management committee or other equivalent body where action by a board of directors is
proposed to be required. 62
As another example, where a PPSI is subject to a group risk management program of a
prudentially supervised IHFI that covers the PPSI subsidiary, the OCC should not seek to
impose additional risk management requirements on the PPSI if the group risk
management program is consistent with the NPR’s principles-based approach to risk
management.
If, on the other hand, the OCC were to decide to adopt more prescriptive requirements in
a final rule, for example, regarding insider or affiliate transactions, it should not do so in
a way that would disrupt preexisting adjustments that have been made to address the
structural differences of the U.S. operations of foreign banks. 63
(c)

Capital Standards for Federal Branches

Section 4(a)(4)(C)(iii) of the GENIUS Act provides that insured depository institutions
and depository institution holding companies subject to consolidated leverage and riskbased capital requirements may not be required to hold regulatory capital with respect to
a consolidated PPSI subsidiary that is greater than the capital the PPSI must maintain
under the GENIUS Act and its implementing regulations. 64 Consistent with this
requirement, the NPR would amend the OCC’s capital rules to deconsolidate PPSI
subsidiaries for regulatory capital purposes. 65

61

NPR § 15.2.

62

See, e.g., NPR §§ 15.13(a)(2)(vii) (requiring board or audit committee review of internal audit
effectiveness), 15.13(a)(3)(ii) (board reporting requirements), 15.14(k) (board certification
requirement).

63

For example, the FRB’s Regulation W, which restricts extensions of credit and other covered
transactions between a bank and its affiliates, only applies to U.S. branches of foreign banks in limited
circumstances. See 12 C.F.R. § 223.61.

64

GENIUS Act, Section 4(a)(4)(C)(iii).

65

NPR, 91 Fed. Reg. at 10244.

20

As discussed above, federal branches may be licensed as PPSIs directly, or may establish
subsidiaries that are licensed as PPSIs, but federal branches are not subject to separate
leverage and risk-based capital requirements in the United States. Instead, they are
subject to their parent’s consolidated leverage and risk-based capital requirements under
their home-country law, and, as the NPR notes, are required to maintain a capital
equivalency deposit in the United States calculated in part based on total liabilities of the
federal branch. 66 For consistency and to ensure national treatment for federal branches,
federal branches that are licensed as PPSIs or have PPSI subsidiaries should not be
required to include payment stablecoin liabilities in their traditional calculation of capital
equivalency deposits. Instead, consistent with Section 4(a)(4)(C)(iii), capital equivalency
requirements for payment stablecoin liabilities should be calculated according to the rules
in NPR § 15.41.
To implement this recommendation, the OCC should amend its capital equivalency
deposits at 12 C.F.R. § 28.15 to add a new section 28.15(g):
“(g) Adjustments for permitted payment stablecoin issuers. Notwithstanding any
other provision in this section, a foreign bank that has a Federal branch that is, or
is consolidated with, a permitted payment stablecoin issuer as defined in § 15.2 of
this chapter must make the following adjustments when calculating its CED:
(1) If the Federal branch is a permitted payment stablecoin issuer, (i)
deduct payment stablecoin redemption obligations from the Federal
branch’s liabilities, and (ii) add to the Federal branch’s CED the amount
of minimum capital required for the branch’s permitted payment
stablecoin issuer activities as calculated under § 15.41(a) of this chapter;
and
(2) If the Federal branch has a subsidiary that is a permitted payment
stablecoin issuer, deconsolidate the permitted payment stablecoin issuer
from the Federal branch’s balance sheet for purposes of calculating the
CED.”
B.

Registration and Regulation of FPSIs
1.

The NPR’s FPSI provisions should be revised to more closely
reflect the statutorily specified role the OCC has with respect to
the substantive regulation of FPSIs, while continuing to preserve
the OCC’s supervisory oversight of FPSIs

Section 18 of the GENIUS Act gives the OCC an important role with respect to the
registration and ongoing monitoring of FPSIs. Although important, the OCC’s role is
66

See 12 U.S.C. § 3102(g); 12 C.F.R. § 28.15; NPR at Question 190.

21

specified with particularity in the statute, and it does not extend to imposing new
substantive requirements on FPSIs.
Under Sections 18(a) and 18(b), Treasury is responsible for determining whether a
foreign regulatory and supervisory regime is comparable to the GENIUS Act regulatory
framework for PPSIs. The OCC is charged under Section 18(c) with evaluating
registration based on the statutory factors Congress identified, issuing rules relating to
registration approval standards and appeals, and establishing requirements for reporting,
supervision, and examination of FPSIs in furtherance of the OCC’s ongoing monitoring
of registered FPSIs. Treasury is charged more broadly with rulemaking “to carry out
[Section 18].” 67
Subpart D of the NPR, which includes the proposed provisions regarding the regulation
of FPSIs, does not consistently reflect the Act’s allocation of responsibilities for FPSIs
between the OCC and Treasury, and several elements of Subpart D would impose
substantive requirements beyond the role Section 18 assigns to the OCC. These
requirements should be withdrawn, and Subpart D should be revised so that it more
closely reflects the OCC’s role in accepting and approving registrations, monitoring FPSI
activity for compliance with the Act, and, where appropriate and authorized under the
statute, rescinding registrations. These changes would enhance legal clarity over the
statutory requirements for FPSIs to make their payment stablecoins available in the
United States, and distinguish clearly between the responsibilities of Treasury and the
OCC.
For example, while we recognize that NPR § 15.31(a)—as currently drafted—essentially
restates the statutory requirements under Section 18, doing so implies a broader scope of
delegated authority than Section 18 appears to provide. Under the statutory framework,
an FPSI that satisfies the four requirements of Section 18(a) is not subject to the
prohibitions in Section 3 of the Act, and is relieved from all of Section 3’s prohibitions,
including, for example, Section 3(g)’s accounting, collateral, margin and settlement asset
prohibitions. 68 We do not believe that an OCC rule is required to effectuate this statutory
exemption. 69

67

GENIUS Act, Section 18(b)(6).

68

See GENIUS Act, Section 18(a) (“the prohibitions under section 3 shall not apply to” a qualifying
FPSI).

69

We also note that NPR § 15.31(c) repeats and interprets the statutory prohibition on interest or yield
payments by FPSIs in Section 4(a)(11) of the Act. We do not view the interpretation and presumption
in NPR § 15.31(c)(2) as a new substantive requirement on FPSIs, but rather as an interpretive
statement explaining how the OCC views and expects to apply the statutory limit in connection with
the OCC’s role monitoring FPSI compliance with the Act pursuant to Section 18(c)(2) of the Act. For
this reason, we do not believe NPR § 15.31(c) raises the same level of concern as NPR § 15.31(a).

22

As another example, Section 18(c)(1)(C) identifies five factors the Comptroller “shall
consider” in deciding whether to reject an FPSI registration, but NPR § 15.32(c)(4)
diverges where it would add consideration of “risks relating to ensuring timely
redemption for United States customers” to the statutory factor that requires only
consideration of “whether the foreign payment stablecoin presents a risk to the financial
stability of the United States; . . . .” 70 In its review of registration requests, the OCC may,
of course, consider any facts that genuinely bear on U.S. financial stability, including
facts about redemption practices where relevant, and our members recognize the
importance of ensuring FPSIs can meet timely redemption requests. Under the statutory
structure, however, judgments regarding the adequacy of redemption standards applicable
to an FPSI more appropriately belong to Treasury in the first instance.
2.

The OCC should tailor its supervisory, examination and reporting
requirements regarding the non-U.S. activity of FPSIs to what is
reasonably necessary to monitor the FPSI’s U.S. payment
stablecoin activity and its compliance with the GENIUS Act

The OCC should clarify in the final rule that its exercise of authority to examine an FPSI,
request reports and other information from it, and obtain access to personnel and records
will be directed only to the purposes Congress identified in Section 18, which is the
ongoing monitoring of the FPSI’s U.S. payment stablecoin activity for compliance with
the GENIUS Act.
Section 18(c)(2) of the Act provides that an FPSI is subject to “reporting, supervision,
and examination requirements as determined by the Comptroller; . . . .” 71 This is done in
the context of the Act’s ongoing monitoring framework for FPSIs where the OCC’s role
is to monitor an FPSI’s compliance with the requirements of the Act, including the
maintenance of adequate U.S. reserves and not posing a risk to U.S. financial stability or
an illicit finance risk. 72 These are specific areas of concern and do not translate to general
prudential supervision of the FPSI’s worldwide business. To ensure that the NPR’s
reporting, supervision and examination provisions align with the scope of the OCC’s
authority, the OCC should adopt language providing that supervisory requests concerning
non-U.S. activity will be limited to what is reasonably necessary to monitor the FPSI’s
U.S. payment stablecoin activity and its compliance with the GENIUS Act, including
U.S. reserve sufficiency, and any U.S. financial stability or illicit finance risks.
This change will be important to cabin the otherwise broadly framed reporting
requirements proposed in the NPR. NPR § 15.31(b)(1) would require a registered FPSI to
“fully accede to any request by the OCC regarding reporting, supervision, or
70

GENIUS Act, Section 18(c)(1)(C)(iv).

71

GENIUS Act, Section 18(c)(2)(C)(iv).

72

See GENIUS Act, Section 18(c)(2)-(3).

23

examination,” while NPR § 15.32(d)(1) would require the FPSI, “[u]pon request by the
OCC,” to provide “prompt and complete access to all officers, directors, employees, and
agents and all relevant books, records, or documents” in a form and location accessible to
the OCC in the United States. 73 Without a limiting principle in the regulatory text, such
language could extend the OCC’s supervisory activity far beyond what is necessary to
satisfy its statutory mandate.
When it is consistent with the purposes of the Act for the OCC to request information
concerning non-U.S. operations, the OCC should tailor the scope of the request to matters
bearing on the issuer’s U.S. payment stablecoin activity, U.S.-located reserves and the
statutory risks Congress directed the OCC to evaluate. In addition, the OCC should defer
to home-country reports and avoid duplicating information requests to the greatest extent
possible. The same principle should apply to the intensity and frequency of examinations,
which should reflect the relative scale of the FPSI’s U.S. business rather than
automatically mirroring supervision of a PPSI with a materially different operating
footprint. 74
The NPR’s reporting provisions should be tailored for the same reasons. NPR
§ 15.31(b)(2)(i) would require an FPSI to produce the reports required of a PPSI under
NPR § 15.14, “plus any other reports the OCC may require,” subject only to a
discretionary exemption process. 75 But NPR § 15.14 is for PPSIs subject to the OCC’s
comprehensive supervisory framework, including full-scope examinations, Englishlanguage books and records, weekly confidential reporting, and—in some cases—annual
GAAP financial statements audited by a registered public accounting firm. 76
An FPSI is differently situated. It may be subject to different sets of accounting and
regulatory reporting requirements in its home country (e.g., IFRS rather than GAAP) and
Section 18 subjects it to OCC monitoring for a narrower set of statutory purposes given
the primary role of home-country regulators in supervising FPSIs. The final rule should
require only those reports reasonably necessary to assess the FPSI’s U.S. payment
stablecoin activity and compliance with the Act and should defer to home-country reports
and accounting principles to the maximum extent possible.
73

NPR § 15.32(d)(1).

74

The NPR provides that the OCC will “conduct full-scope examinations of a foreign payment
stablecoin issuer registered with the OCC under [NPR] § 15.32 at the same frequency as the OCC
would examine a permitted payment stablecoin issuer under [NPR] § 15.14 unless the OCC
determines, in its sole discretion, to examine at a different frequency.” NPR § 15.31(b)(3)(i). The
NPR observes, however, that “less frequent examinations may be appropriate in circumstances where
the volume of U.S. holdings and transactions is a small fraction of a foreign payment stablecoin
issuer’s business.” NPR, 91 Fed Reg. at 10235.

75

See NPR §§ 15.31(b)(2)(i)-(ii).

76

See NPR § 15.14.

24

A tailored approach would better implement the statute and produce a more workable
supervisory regime. It would preserve the OCC’s ability to obtain the information it
genuinely needs to monitor U.S. reserve sufficiency, financial stability, illicit finance
risks and U.S. compliance matters, while reducing unnecessary friction for FPSIs
operating under comparable home-country regimes. It would also enhance legal certainty
for FPSIs considering whether to enter the U.S. market by making clear that the OCC’s
authority over FPSIs is broad enough to enforce the Act, but not so broad as to become
the de facto worldwide prudential supervisor of an FPSI’s activities, management and
governance.
To accomplish these recommendations, the OCC should replace NPR § 15.31(b)(2)(i)
with a new set of reporting requirements tailored to an FPSI’s U.S. activities and should
add new subparagraphs (4) and (5) to NPR § 15.31(b):
“(4) Reporting and information requests regarding non-U.S. activities. To the
maximum extent possible, reporting requirements, information requests, and other
supervisory and examination activities regarding an FPSI’s non-U.S. activities,
management and operations will be limited to what is reasonably necessary to
monitor the FPSI’s U.S. payment stablecoin activity and its compliance with the
GENIUS Act, including U.S. reserve sufficiency, and any U.S. financial stability
or illicit finance risks.
(5) Avoidance of duplication. The OCC will, to the fullest extent possible, defer to
home-country reports and accounting principles and avoid duplication of
examination activities, reporting requirements, and requests for information.”
3.

The OCC should adopt a flexible, principles-based approach to
estimating U.S. customer liquidity demands for FPSIs

Section 18(a)(3) of the GENIUS Act requires an FPSI to maintain reserves in a United
States financial institution “sufficient to meet the liquidity demands of United States
customers.” 77 The Act does not, however, define the class of persons who would qualify
as “United States customers,” provide any differentiated protection for such persons
specifically tied to their status or location (or the location of FPSI reserves) or prescribe a
particular methodology for estimating U.S. customer demand or U.S. customer holdings
of a payment stablecoin.
Our members recognize that confidence in the payment stablecoin market will require
both PPSIs and FPSIs to stand firmly behind their commitments to fulfill redemption
requests at par and in a timely manner, and we support the goal of the GENIUS Act to
ensure that PPSIs and FPSIs alike have sufficient, accessible liquidity to meet the
requests of customers. At the same time, requirements to satisfy the general statutory
77

See GENIUS Act, Section 18(a)(3).

25

obligation to measure potential U.S. liquidity demands must reflect practical realities,
including technological and informational limitations on issuers’ ability to identify and/or
locate the holders of their payment stablecoins.
If an issuer’s payment stablecoins are used at commercial scale, the issuer is very
unlikely to be able to have visibility into the identity and/or location of every wallet
holder. It may be possible to trace ownership accurately if an issuer’s payment stablecoin
is only transferrable on the relevant distributed ledger to a limited number of wallets that
are whitelisted by the issuer after obtaining required information from the wallet holder,
but such a configuration would likely be rare and of uncertain commerciality. Payment
stablecoins issued on public, permissionless ledgers are in effect electronic bearer assets
that can be exchanged across multiple platforms, including on peer-to-peer and other
decentralized networks, and held through intermediaries or self-custodied in hot or cold
wallets. Particularly in the case of self-custody, it would be operationally difficult—if not
impossible—to determine where the holders of an issuer’s payment stablecoins are
located.
Given these technological hurdles, the proposed requirement for FPSIs to provide a
monthly composition report “describing the total number of outstanding payment
stablecoins . . . held by United States customers” is unworkable and should be replaced
with a flexible, principles-based approach that permits FPSIs to use a range of
reasonable, well-documented methodologies to estimate U.S. customer liquidity
demands. 78
We believe it is too early to prescribe a one-size-fits-all approach to estimating liquidity
demands in the United States, and the OCC should remain open to a variety of solutions,
at least until it has more experience and data from FPSIs that issue payment stablecoins
in the United States. Until that time, the OCC should simply require reasonable, best
efforts estimation methods supported by policies, controls and periodic reassessment and
subject to supervisory review, rather than a rigid one-size-fits-all reporting mandate. 79

78

NPR § 15.32(d)(3)(ii). The NPR contains several open-ended questions that reflect the difficult
definitional and measurement issues raised by this requirement. See, e.g., NPR at Question 4
(regarding the appropriate definition of customer), Question 24 (regarding the definition of United
States customer), Question 170 (regarding how to estimate U.S. holders and required U.S. reserves).

79

For example, we understand that some current stablecoin issuers that have commitments to meet
redemption requests in multiple jurisdictions rely on reports from digital asset platforms regarding the
distribution of stablecoins among the platforms’ customers and use that to extrapolate an estimate of
total holdings in various jurisdictions. Another, potentially complementary, approach might be to rely
on historic redemption data informed by historical stress experiences, which may also provide a
second opportunity to obtain location information regarding stablecoin holders.

26

4.

FPSI assessments should be appropriately calibrated to reflect the
scope of their U.S. operations and the OCC’s narrower scope of
supervisory responsibilities for FPSIs as compared to PPSIs

We appreciate the OCC’s goal of approaching assessments to recoup the OCC’s
supervisory costs “in a fair, efficient, and cost-effective manner.” 80 Currently, the NPR
would assess FPSIs and PPSIs equally, based on the relative asset size of the issuer. This
approach to FPSIs assessments fails to account for (i) the narrower scope of the OCC’s
supervisory responsibility for FPSIs as compared with PPSIs; (ii) the primary role of
home-country regulators in supervising FPSIs; and (iii) the fact that the OCC’s
supervision of an FPSI should be limited to the FPSI’s U.S. activities, not its non-U.S.
business. Each of these factors suggests that an FPSI’s assessments should be smaller
than a PPSI of similar asset size.
In order to calibrate FPSI assessments appropriately, we recommend that the OCC first
apply a standard discount to PPSI rates to reflect the more limited role the OCC will have
in supervising FPSIs as compared to PPSIs. 81 The approach should then be further
tailored to reflect the scope of each FPSI’s U.S. operations, rather than its worldwide
operations. This adjustment could be based on the proportion of issuances an FPSI directs
to U.S markets, the amount of U.S.-located reserves it maintains to satisfy anticipated
U.S. liquidity demands or other measures of U.S.-facing activity.
Some calibration to reflect U.S. versus non-U.S. activity is necessary to avoid applying
assessments based on worldwide assets and activities to an FPSI with only a small
proportion of its business touching the United States. It also would be consistent with the
NPR’s recognition, in other contexts, that supervision of an FPSI may appropriately be
tailored where U.S. holdings and transactions represent only a small fraction of the
issuer’s overall business.
5.

The OCC should coordinate a statement with Treasury recognizing
that FPSIs permitted to issue in the United States through a
comparability determination and satisfaction of Section 18 should
be entitled to the same scope of preemption that federally qualified
PPSIs receive under Section 5(h)

The GENIUS Act is a new statutory scheme that creates a comprehensive licensing and
registration regime for payment stablecoin issuers. The Act establishes the exclusive
80

NPR, 91 Fed. Reg. at 10249.

81

As explained in Sections III.B.1-2 above, the OCC’s supervisory role with respect to FPSIs should be
focused on the U.S. operations of the FPSIs and limited to registration and monitoring compliance
with specific statutory conditions—particularly the requirement to maintain U.S.-located reserves
sufficient to meet U.S. liquidity demands—rather than the fuller supervisory framework applicable to
domestic PPSIs. Compare NPR §§ 15.31-15.32 (FPSIs) with NPR §§ 15.10-15.16 (PPSIs).

27

means by which issuers may receive federal or state licenses as PPSIs, imposes
comprehensive minimum requirements for federal and state regulators that license and
supervise PPSIs, and opens a path for FPSIs to make their payment stablecoins available
in the United States subject to a Treasury comparability determination and registration
with the OCC. Both the statutory structure and express statements of congressional intent
demonstrate a federal interest in establishing a nationally coherent licensing regime for
payment stablecoin issuers. Where federal law creates a “pervasive” regulatory scheme or
establishes a “dominant” federal interest, federal law “occupies the field” and preempts
supplementary or conflicting state licensing and registration requirements. 82
In debating the GENIUS Act, Congress was concerned over the lack of a “clear Federal
framework for dollar-backed payment stablecoins,” 83 and understood that by passing the
Act, it was creating “a clear and defined stablecoin framework.” 84 To this end,
Section 5(h) of the GENIUS Act expressly preempts state licensing and chartering
requirements as applied to federal qualified payment stablecoin issuers and subsidiaries
of insured depository institutions. Section 7(f) includes similar express preemption
language regarding the application of host state requirements to state qualified payment
stablecoin issuers. Section 18 does not include express preemption language for FPSIs,
but the lack of express preemption language on a particular topic does not preclude a
finding of field or conflict preemption based on the statutory structure as a whole, 85
particularly where, as here, the FPSI provisions are part of the same comprehensive
federal regime for licensing and registration of payment stablecoin issuers.
Notably, neither the express preemptive language in Sections 5(h) and 7(f) of the Act, nor
application of the principles of field and conflict preemption, require full preemption of
state law. Both Section 5(h) and 7(f) are limited to state chartering, licensing and
82

See Arizona v. United States, 567 U.S. 387, 399 (2012) (“The intent to displace state law altogether
can be inferred from a framework of regulation ‘so pervasive . . . that Congress left no room for the
States to supplement it’ or where there is a ‘federal interest . . . so dominant that the federal system
will be assumed to preclude enforcement of state laws on the same subject.’”) (internal citations
omitted); Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008) (“Pre-emptive intent may also be inferred
if the scope of the statute indicates that Congress intended federal law to occupy the legislative field,
or if there is an actual conflict between state and federal law.”) (internal citations omitted).

83

171 Cong. Rec. H3405, at H3421 (daily ed. July 17, 2025) (statement of Rep. Bryan Steil) (“For too
long, the United States has operated without a clear Federal framework for dollar-backed payment
stablecoins, leaving consumers vulnerable to fraud, innovators in limbo, and our global
competitiveness at risk.”).

84

Id. (statement of Rep. Thomas Emmer). See also id. at H3424 (statement of Rep. Michael Flood)
(“[T]his bill absolutely provides a comprehensive and safe Federal framework for stablecoin
regulation.”).

85

See Altria at 76 (“Congress may indicate pre-emptive intent through a statute’s express language or
through its structure and purpose. If a federal law contains an express pre-emption clause, it does not
immediately end the inquiry because the question of the substance and scope of Congress’
displacement of state law still remains.”) (internal citations omitted).

28

authorization to do business requirements because those laws would conflict and interfere
with the GENIUS Act’s comprehensive licensing regime; state consumer protections
laws, for example, are expressly preserved. We believe the principles of federal
preemption also require preemption of state chartering, licensing and authorization to do
business requirements as applied to FPSIs. 86
The purpose of Section 18 is to allow the United States to benefit from non-U.S. payment
stablecoins where the issuers are subject to comprehensive regulation by non-U.S.
regulators comparable to regulation under the GENIUS Act plus ongoing monitoring of
their local operations for compliance with the requirements of the Act. It does this by
empowering Treasury to determine that an FPSI is subject to a comparable regulatory and
supervisory regime and conditionally exempting such FPSIs from Section 3’s
prohibitions, and by empowering the OCC to review and accept or deny registration
applications from FPSIs and to determine “reporting, supervision, and examination
requirements” for the OCC’s ongoing monitoring of FPSIs in the United States. 87
Treasury’s comparability determination is the key federal consideration under Section 18.
Once Treasury makes a determination, an FPSI’s entry into the U.S. market is governed
by the federal Section 18 pathway through OCC registration and monitoring. Allowing
states to impose separate chartering or licensing requirements would frustrate that
determination and undermine the uniform national framework Congress established. In
this scenario, comparability would lose significant practical value, and the result would
be regulatory fragmentation, higher entry costs and reduced willingness by well-regulated
foreign issuers to serve U.S. markets. Where, as here, a state law “stands as an obstacle to
the accomplishment and execution of the full purposes and objectives of Congress,” it is
preempted. 88
We recognize that the OCC has extensive experience with issues of federal preemption
under the National Bank Act and the Dodd-Frank Act, based on an extensive line of court
precedents that generally find preemption when a state law “prevent[s] or significantly
interfere[s] with the national bank’s exercise of its powers.” 89 We also recognize that the
GENIUS Act is a new statute, not necessarily controlled by precedents interpreting the
National Bank Act, but we believe the standard is informative, because imposing state
licensing or chartering requirements on an FPSI that already has received a comparability

86

In this context, the preemption language in Section 5(h) and 7(f) should be read as clarifying the
scope of the Act’s preemption over state law—state licensing, chartering, and authorization to do
business requirements are preempted, but not, e.g., state consumer protection laws.

87

See GENIUS Act, Section 18(c). See also Sections III.B.1-2, above.

88

Arizona at 399 (internal citation omitted).

89

See, e.g., Cantero v. Bank of Am., N.A., 602 U.S. 205 (2024); Barnett Bank of Marion Cnty., N.A. v.
Nelson, 517 U.S. 25 (1996).

29

determination and registered with the OCC would significantly interfere with the FPSI’s
access to the U.S. market, in conflict with the purpose of Section 18. 90
Although ultimate authority for establishing the scope of federal preemption under the
Act does not rest with the OCC, the OCC could help bring clarity to the market if it
coordinates with Treasury to issue a joint statement affirming its understanding that
Section 18 preempts state requirements relating to chartering, licensing or other
authorization to do business that might otherwise apply to an FPSI where Treasury has
determined that the FPSI is subject to comprehensive home-country regulation and
supervision comparable to the GENIUS Act, including particularly all relevant elements
of Section 4(a) of the Act, and the FPSI has registered with the OCC under Section 18.
C.

Ensuring a Vibrant U.S. Market for Non-U.S. Dollar Payment
Stablecoins
1.

Reserve asset requirements should be tailored to accommodate
PPSIs that issue non-U.S. dollar payment stablecoins

As discussed in Section II.C above, the potential inclusion of non-U.S. dollar stablecoins
in the scope of payment stablecoins regulated under the GENIUS Act raises serious
questions because of the asset-liability mismatch between non-U.S. dollar liabilities and
the predominantly U.S. dollar reserves. The IIB ANPR Letter asked Treasury to use its
broad rulemaking and interpretive authority under Section 3(d) to exclude non-U.S.
dollar stablecoins from the definition of payment stablecoin and highlighted the
importance of allowing non-U.S. dollar-denominated stablecoins access to the U.S.
market. 91 If Treasury does not exercise this authority, the OCC should coordinate with
the other Primary Federal Payment Stablecoin Regulators to modify reserve requirements
for non-U.S. dollar payment stablecoins issued by PPSIs using their authority under
Section 4(a)(4)(B) to “tailor and differentiate among issuers on an individual basis or by
category, taking into consideration . . . business model risk profile, complexity . . . and
any other risk-related factors.” 92
PPSIs that issue payment stablecoins in non-U.S. currencies have different risk profiles
because of the different currency risks embedded in their products. Section 4(a)(4)(B)
authorizes the OCC to modify reserve standards to reflect this different set of risks. The
90

See id. See also, e.g., KalshiEX LLC v. Flaherty, No. 25-1922, 2026 WL 924004, at *4 (3d Cir. Apr.
6, 2026) (finding that New Jersey sports gambling law was likely to be preempted under conflict
preemption when applied to sports events contracts listed on a CFTC-licensed designated contract
market (“DCM”) because state enforcement would effectively prohibit the DCM from offering sportsrelated events contracts in New Jersey, in conflict with the regulatory regime for DCMs established
under federal law).

91

IIB ANPR Letter at 15.

92

GENIUS Act, Section 4(a)(4)(B)(i).

30

OCC should expressly authorize non-U.S. dollar reserve assets for PPSIs that issue nonU.S. dollar payment stablecoins to address these risks. 93 If not addressed, it may be
impractical, or at least unduly risky and expensive, for a PPSI to issue non-U.S. dollar
payment stablecoins in the United States. At a minimum, it would introduce the need to
use potentially complicated derivatives strategies to hedge the risk of the mismatch
between the currency in which a payment stablecoin is denominated and its U.S. dollardenominated reserves, creating significant unnecessary risk and imposing significant
costs on issuers and users.
If these issues are not resolved, non-U.S. dollar stablecoin activity is likely to remain
offshore, where there can be more workable reserve treatment for non-U.S. dollar
products, which could lead to fragmentation of stablecoin markets as more non-U.S. and
U.S. dollar stablecoin activity develops outside the United States. The OCC should
therefore address this issue clearly in the final rule, both to mitigate currency-mismatch
risk and to avoid driving stablecoin issuance, liquidity and related financial innovation
offshore.
2.

PPSIs that issue non-U.S. dollar payment stablecoins should be
expressly permitted to engage in traditional FX risk mitigation
strategies

In addition to expanding the scope of permitted reserve assets for non-U.S. dollar
payment stablecoin issuers, the OCC should provide in NPR § 15.10(a) that FX risk
management and FX hedging is a permitted activity for PPSIs that issue non-U.S. dollar
payment stablecoins. 94 Although substantially less optimal than matching the currencies
of reserves to payment stablecoin liabilities, unless the OCC permits 100% currency
matching between reserves and the payment stablecoins they support (e.g., a Eurodenominated payment stablecoin could have only Euro-asset reserves), the use of FX
hedging and other FX risk management techniques will be a necessary tool to address the
risk inherent in cross-currency transactions.
D.

Application and Reporting Forms
1.

The OCC should publish proposed application and reporting
forms for public review and comment

The NPR references application and reporting forms and instructions that have not yet
been published. It is important for prospective PPSIs and FPSIs and other market
93

As noted in Section II.C, currently the only non-U.S. dollar reserve assets that would appear to be
permitted under the Act and NPR are demand deposits at insured depository institutions, which could
include foreign currency deposit accounts, and “money” received on overnight repos backed by shortterm Treasuries. See note 25 above.

94

See NPR at Question 34.

31

participants to have the opportunity to review and comment on these forms. Without
transparency into the specific information the OCC will require, prospective issuers and
other market participants cannot fully evaluate the implications of becoming a PPSI or
FPSI.
Before adopting a final rule, the OCC should publish and solicit comment on the forms
and instructions referenced in NPR §§ 15.14(h)-(i), 15.30(b)(1)(i), 15.31(b)(2), and
15.32(b)(1)(i), along with any separate forms the OCC is considering for covered
custodians under Section 10(d) of the Act. The OCC should also specify that it may not
add substantive information requirements, approval conditions or ongoing reporting
obligations absent further notice-and-comment rulemaking.
IV.

SPECIFIC QUESTIONS RAISED BY THE NPR
Question 1: Are the definitions in the proposed rule appropriately scoped? How
should they be improved?

As discussed in Section III.A.1 above, the definition of “insured depository institution”
under NPR § 15.2 should be revised to no longer limit it to Section 3(c)(2) of the FDI Act
and clarify that the uninsured U.S. branches of foreign banks are therefore included.
Question 5: Section 2 of the GENIUS Act (12 U.S.C. 5901) does not define
“depository institution.” Is the definition of “depository institution” in the
proposed rule sufficiently clear? Are there particular types of institutions for
which it would be unclear whether the type of institution is a depository
institution and which agency is the primary Federal payment stablecoin regulator
for the type of institution? What additional clarifications would be helpful?
Please see Section III.A.6 above for a discussion of the definition of depository
institution.
Question 8: Is the term “director” sufficiently clear, including with respect to
Federal branches? How should the OCC further clarify the term?
As discussed in Section III.A.7.b, we support the OCC’s determination to define a board
of directors to include a “group of individuals that serve[s] the nearest equivalent
function,” and we recommend that the OCC define directors and boards flexibly to
accommodate non-U.S. and branch governance models.
Question 10: Is the definition of “eligible financial institution” appropriately
scoped? How could the term be further refined? Are there particular elements of
the definition that should be excluded or should be addressed elsewhere in the
proposed rule?

32

Consistent with Section 10(a) of the Act, we understand that the definition of eligible
financial institution would include the U.S. branches and other U.S. operations of foreign
banks. Please see Sections III.A.1-4 for a discussion of other issues related to the U.S.
branches of foreign banks acting as custodians.
Question 13: The term “outstanding issuance value” refers to the total
consolidated par value of all of an issuer’s payment stablecoins. Should the
definition also include the par value of non-consolidated affiliates? If so, what
changes should be made to the reserve asset requirements to ensure 1:1 backing
across all affiliated entities?
If the OCC chooses to include affiliates in the definition of “outstanding issuance value,”
PPSIs owned by IHFIs should only include other affiliated PPSIs and should not include
affiliated FPSIs (whether or not an affiliated FPSI has used Section 18 to make its
payment stablecoins available in the United States). IHFIs should not be required to count
their non-U.S. payment stablecoin activities towards issuance thresholds that apply to
their U.S. licensed PPSI. 95
Question 15: Is the exclusion of a digital asset that ‘‘is a deposit (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), including a
deposit recorded using distributed ledger technology’’ from the definition of
‘‘payment stablecoin’’ sufficiently clear? Should the OCC clarify which tokenized
products this exclusion may apply to?
The definition of deposit, which operates as a carve-out from the definition of payment
stablecoin, should be clarified to confirm that deposits, including tokenized deposits,
issued by foreign banks, including by their uninsured state branches, do not constitute
payment stablecoins under the GENIUS Act. The NPR adopts the definition of deposit in
Section 3 of the FDI Act, which generally includes deposits issued by a “bank or savings
association;” those terms in turn do not include the non-U.S. operations of foreign banks,
or their uninsured state-licensed branches. 96 We do not believe Congress intended to treat
bank deposits as payment stablecoins, and the corresponding definitions should be
corrected to clarify this issue.
Question 24: Should the OCC define United States customer to mean a customer
that resides in the United States, as proposed, or use a different definition? For
example, should the definition be limited to United States citizens or include both
95

A parallel to this approach can be found in FRB’s Regulation YY, which applies enhanced prudential
standards on banking organizations based on asset size and applies thresholds relevant to foreign
banking organizations based on combined U.S. assets, as opposed to global assets. See 12 C.F.R.
§ 252.5.

96

See 12 U.S.C. §§ 1813(a)(1); (b)(1).

33

citizens and residents of the United States? Should the definition be limited to
permanent residents of the United States?
We do not believe the OCC should introduce a specific definition of U.S. customer for
purposes of Section 18 at this time because it would imply a level of informational
precision that is unlikely to exist and would impose undue operational rigidities on FPSIs.
As we discuss in Section III.B.3 above, the requirement to estimate liquidity demands
from U.S. customers should be flexible enough to accommodate practical constraints,
including technological and informational limitations, on issuers’ ability to identify
and/or locate the holders of their payment stablecoins. Instead of prescribing a specific
solution and set of definitions, the OCC should remain open to a variety of solutions for
estimating U.S. liquidity demands, at least until it has more experience and data from
FPSIs that issue payment stablecoins in the United States.
If the OCC nevertheless determines to move forward with a definition of United States
customer, it should keep a few principles in mind:
•

First, we believe that the definition needs to be practical to implement based on
the information available to the issuer, which may depend on the method the
issuer has implemented to estimate U.S. liquidity demands. For example, an
issuer that relies on historic redemption data knows more about the identity of
persons that have historically submitted redemption requests to the issuer,
whereas issuers that rely on DASPs to provide information about the distribution
of their payment stablecoins, or that make inferences based on networks and
communications channels used by holders, may have less biographical and
geographical information.

•

Second, as a matter of policy, it may be appropriate to focus the definition on
persons that might have a reasonable expectation of protection under U.S. law.
We believe a definition based on residency or a permanent physical presence in
the United States would generally be consistent with this principle, assuming that
it is practically ascertainable or estimable based on information available to the
issuer.

•

Third, any attempt to precisely define U.S. customer would also need to keep in
mind the numerous scenarios where the “U.S.” status of an individual or
institutional person may not be entirely clear, such as the status of U.S. and nonU.S. offices and subsidiaries of multinational corporations, the status of persons
acting through agents, fiduciaries and brokers who may be in different locations

34

than their clients and the treatment of persons temporarily resident or traveling
through another jurisdiction. 97
Question 34: Should the OCC explicitly provide that managing foreign exchange
risk is a permissible activity for the issuers of stablecoins that are not
denominated in the United States dollar? If so, should the OCC include
limitations on the activity (e.g., that the permitted payment stablecoin issuer may
not over-hedge its position and may not use foreign exchange risk management as
a pretext to engage in speculation)? If the OCC permits this activity, what
requirements should the OCC impose to mitigate risks? For example, should
there be a capital add-on for foreign exchange risk?
As discussed in Section III.C.2 above, it is essential that PPSIs that issue non-U.S. dollar
payment stablecoins be permitted to manage FX risk through FX hedging and other
strategies, subject to principles-based risk management standards. Permitting non-U.S.
dollar reserves will mitigate the cross-currency risk to some extent, but any entity
operating across multiple reference currencies should have some ability to hedge FX risk.
Regulatory standards for FX risk management should be principles based—it should not
be necessary for the OCC to impose haircuts, capital add-ons or other quantitative or
technical limits on FX risk management.
Question 54: The proposed rule would, consistent with the GENIUS Act, allow as
reserve assets funds held as demand deposits at an insured depository institution
(including any foreign branches or agents, including correspondent banks).
Should the proposed rule add definitions for these terms to make them clearer or
impose restrictions on the use of foreign branches or agents and correspondent
banks? For example, should the proposed rule require that stablecoins
denominated in United States dollars only be backed by demand deposits at U.S.based depository institutions (i.e., reserve assets could not include Eurodollar
deposits)? Should the OCC include any additional requirements with respect to
reserve assets held abroad, such as applying a haircut to the reserve assets,
imposing a capital charge, or including additional policies and procedures to
manage the risks associated with holding reserve assets abroad?
By including deposits held at foreign branches, agents and correspondent banks in the list
of permissible reserve assets, 98 the GENIUS Act recognizes that a PPSI may have a good
reason to place some reserves as demand deposits in non-U.S. locations. Holding deposits
outside the United States could facilitate non-U.S. redemption (and non-U.S. issuance);

97

See, e.g., IIB ANPR Letter at 10-11.

98

See GENIUS Act, Section 4(a)(1)(A)(ii).

35

they could also be used to satisfy reserve localization requirements if another jurisdiction
adopts provisions similar to the requirement in Section 18(a)(3) of the GENIUS Act. 99
The inclusion of foreign branches, agents and correspondent banks also offers further
evidence that Congress did not intend to limit the eligibility to hold demand deposits to
institutions that have U.S. deposit insurance because even deposits held at the non-U.S.
branch of a U.S. bank generally do not benefit from U.S. deposit insurance. 100
These observations further support the broad construction of the term “insured depository
institution” discussed in Section III.A.1 above, which includes the uninsured U.S.
branches of foreign banks. A further corollary of this construction is that, when reserve
assets are held as deposits at the U.S. branch of a foreign bank, the foreign bank’s nonU.S. branches must qualify as foreign branches for purposes of this provision. Otherwise,
a foreign bank that holds reserve assets in the form of deposits in its insured 101 or
uninsured U.S. branch would not be able to meet non-U.S. liquidity demands or reserve
localization requirements by transferring deposits abroad, while a U.S. bank would be
permitted to do so. This would interfere with the principle of equality of competitive
opportunity both inside and outside the United States, based on the arbitrary distinction
of whether a foreign bank’s U.S. presence is through a bank subsidiary, an insured branch
or an uninsured branch.
If the OCC chooses to add restrictions on the use of foreign branches, agents and
correspondent banks, it should apply them equally across both U.S.- and foreignheadquartered firms, irrespective of whether their U.S. presence is in the form of a bank
subsidiary with federal deposit insurance, or an insured or uninsured branch.
Question 63: Should the proposed rule include other measures to encourage
reserve assets to be held in the form of insured deposits or insured shares?
Proposed § 15.11(d) would include a requirement for larger permitted payment
stablecoin issuers to maintain a minimum percentage of assets as insured deposits
or insured shares. While it may be difficult for larger permitted payment
stablecoin issuers to hold reserve assets as insured deposits due to deposit
insurance limits and the finite number of insured depository institutions in the
United States, should permitted payment stablecoin issuers be required to hold
some minimum amount of reserves as insured deposits in order to provide extra
protection for stablecoin holders? Should the thresholds in proposed § 15.11(d)
be set at different levels: for example, apply to issuers with an outstanding
99

GENIUS Act, Section 18(a)(3) (an FPSI generally must hold reserves in a U.S. financial institution
“sufficient to meet liquidity demands of United States customers”).

100

See 12 C.F.R. § 330.3(e).

101

The term “foreign branch” would have to be given meaning in relation to insured U.S. branches even
under the narrow construction of “insured depository institution” proposed by NPR § 15.2.

36

issuance value of $1 billion, $10 billion, $50 billion, or $100 billion or more?
Should covered larger issuers be required to maintain a smaller or larger
percentage of reserve assets as insured deposits or insured shares (for example,
0.1 percent, 0.25 percent, 1 percent, or 2 percent)? Should the cap be higher or
lower (for example, $100 million, $250 million, or $1 billion)?
No. The GENIUS Act does not require PPSIs to hold a minimum amount of reserves as
insured deposits or insured shares, and the OCC should not read such a requirement into
the statute through regulation. Please refer to Section III.A.1 above for additional
detail. 102
Question 65: There are approximately 4380 total insured banks in the United
States. Should the proposed rule include other measures to spread insured
stablecoin deposits throughout the banking system? If so, how broadly should
insured deposits from permitted payment stablecoin issuers be distributed? For
example, should the final rule be calibrated so that essentially every bank in the
United States could hold some amount of insured deposits from permitted
payment stablecoin issuers if consistent with their risk appetite and risk
management abilities? If so, why? If not, why not?
No. Please refer to Section III.A.1 above. 103
Question 67: Could reserve diversification requirements that encourage diffusion
of deposits cause risks to the banking system (for example, increasing run risks at
banks or replacing more stable deposits with deposits that more likely to be
withdrawn quickly and in large volumes)? Could such diversification
requirements raise operational risks for permitted payment stablecoin issuers or
banks? How difficult would it be for permitted payment stablecoin issuers to
liquidate such deposits in a stressed environment? If deposit insurance rules
change, so that even larger permitted payment stablecoin issuers could be able to
hold all their required deposits as insured, should all deposits held as reserve
assets be required to be insured?
The OCC should avoid reserve diversification requirements that effectively force PPSIs
to spread demand deposits across a very large number of banks. Although diversification
can reduce concentration risk, overly prescriptive requirements could increase operational
and liquidity risk by fragmenting reserves across institutions that may be less able to
absorb and service large wholesale balances. Indeed, the Act limits the scope of deposit
diversification standards that the OCC may require to those that “do not exceed

102

We note that similar issues are discussed in Questions 64 and 69.

103

We note that similar issues are discussed in Questions 68, 70 and 72.

37

requirements that are sufficient to ensure the ongoing operations” of PPSIs. 104 Please
refer to Section III.A.1 above for additional detail. 105
Question 69: How would the proposed rule affect the amount of deposits
maintained in the United States banking system? Would the proposed rule reduce
the number of deposits maintained in the United States banking system and
therefore affect the ability of United States banks to lend? What, if any, measures
should the proposed rule include to mitigate such concerns? Should the proposed
rule include a minimum percent of reserve assets as deposits in order to offset
potential reductions in overall deposit levels?
Please refer to Section III.A.1 above for an explanation of why demand deposit reserve
accounts should be permitted at the uninsured U.S. branches of foreign banks, where they
serve to lend to the U.S. economy in similar fashion to the deposits maintained at other
U.S. insured depository institutions.
Question 170: How should the OCC evaluate whether reserves held by foreign
payment stablecoin issuers in the United States are sufficient to meet the demands
of United States customers? Will foreign payment stablecoin issuers be able to
reliably determine which of their customers are United States customers? Should
the amount of reserves held in the United States be required to exceed by some
margin (e.g., 50 percent) the estimated one-month redemptions by United States
customers? Should the amount of reserves held in the United States be based on
the estimated number of United States holders of the payment stablecoin issued by
the foreign payment stablecoin issuer? Is some other method appropriate for
determining the amount of reserves that must be held in United States
institutions? How are foreign payment stablecoin issuers likely to determine
whether their customers are located in the United States? Are they likely to have
access to sufficient information to make this determination? Is the scope of United
States institutions in which a foreign payment stablecoin issuer may hold reserve
assets appropriately calibrated? Should it include any other eligible financial
institutions?
Please see Section III.B.3 above and our response to Question 24 for a discussion on the
need for flexibility in identifying United States customers and estimating U.S. liquidity
demands.
Question 171: Should the OCC require different or additional information to be
reported by foreign payment stablecoin issuers? If so, what additional
information should the OCC require? How frequently should the OCC require
104

GENIUS Act, Section 4(a)(4)(A)(i).

105

We note that similar issues are discussed in Question 66.

38

such information? Should any additional information be made public? Should the
OCC expressly require foreign payment stablecoin issuers to provide the same
reports, publish the same reports, and make and publish the same certifications as
permitted payment stablecoin issuers? If not, what modifications to the reporting,
publication, and certification requirements would be appropriate for foreign
payment stablecoin issuers?
Please see Section III.B.2 for a discussion of the need to tailor FPSI reporting
requirements. Reporting requirements for FPSIs should be limited to what is reasonably
necessary to monitor the FPSI’s U.S. payment stablecoin activity and its compliance with
the GENIUS Act, including U.S. reserve sufficiency, and any U.S. financial stability or
illicit finance risks. In addition, the OCC should defer to home-country reports to avoid
duplicating efforts for an FPSI, which would put an FPSI on uneven footing with
domestic institutions that would not be subject to multiple regimes.
FPSIs should not be required to provide, publish, or certify the same reports as PPSIs on
an enterprise-wide basis. Instead, reporting, publication, and certification requirements
should be limited to U.S.-relevant information, permit reliance on home-jurisdiction
audits and attestations where Treasury has made a comparability determination and avoid
duplicative public disclosures. Frequency should be periodic and risk based, with public
disclosure confined to high-level reserve and redemption information necessary for
market transparency, and more detailed information provided confidentially to the OCC
as warranted.
Question 172: In proposed § 15.30 related to approval of permitted payment
stablecoin issuers and in proposed § 15.32 related to the registration of foreign
payment stablecoin issuers, should the OCC require that a permitted payment
stablecoin issuer or a foreign issuer be allowed to only issue a single type (i.e.,
brand) of payment stablecoin? What other arrangements designed to ensure legal
separateness with respect to the reserve assets backing a particular brand of
payment stablecoin should the OCC consider? For example, should the OCC
require a permitted payment stablecoin issuer (or its parent company) to hold
reserves in a special purpose, bankruptcy remote vehicle that is fully capitalized
by the issuer and has no liabilities. What are the merits of these arrangements
relative to requiring each issuer to issue only one brand of payment stablecoin? If
the OCC requires a separate issuer for each brand of payment stablecoin, should
the OCC streamline the approval process for certain applicants (e.g., by only
requiring the applicant to provide notice if the parent or affiliate of the new issuer
has previously received approval to act as a permitted payment stablecoin
issuer)? In the absence of a restriction on issuing more than one brand of
stablecoin, how would issuers ensure that reserve assets are properly legally and
operationally allocated to the backing of each brand of stablecoin? Are there any
other issues or challenges that permitted payment stablecoin issuers could

39

encounter in complying with the Act in the absence of such a restriction? If the
OCC were to impose any of the requirements on issuers as described above, how
would these requirements interact with State qualified payment stablecoin issuers
that transition to the Federal regulatory framework that are not subject to the
approval process by the OCC? To ensure equitable treatment across OCCregulated entities, should the OCC, for example, prohibit all permitted payment
stablecoin issuers from issuing more than one brand of payment stablecoin (per
legal entity) in § 15.10?
The OCC should not require a one-brand-per-issuer rule, especially for FPSIs. The better
approach is to focus on whether each payment stablecoin has distinct and segregated
reserve assets and that other arrangements are clearly separated for each payment
stablecoin, rather than forcing every issuer into a single organizational model. For
domestic issuers, that may be achieved through brand-specific reserve accounts,
recordkeeping and governance controls. But for FPSIs, a rigid one-brand rule could be
especially problematic where the same foreign issuer lawfully issues both a U.S. dollar
payment stablecoin and a home-currency payment stablecoin under its home-country
framework.
For FPSIs in particular, the OCC should take a more principles-based approach. FPSIs
may have a number of different organizational structures and methods for segregating
reserves, and the OCC should not prejudge their choice of structure but instead focus on
the substantive outcomes identified in the statute. A blanket one-brand requirement could
make the Section 18 pathway much less workable for well-regulated foreign issuers
without materially improving the security of payment stablecoin reserves if equivalent
safeguards can be achieved through other means. The final rule should instead ask
whether the issuer can demonstrate clear legal and operational allocation of reserves by
brand and whether those protections are sufficient in light of the issuer’s home-country
regime and U.S.-specific risks.
Question 173: Proposed §§ 15.31 and 15.32 refer to foreign payment stablecoin
issuers holding reserve assets in United States financial institutions, consistent
with section 18(a)(3) of the Act (12 U.S.C. 5916(a)(3)). Should the OCC further
define “financial institution” for the purposes of these provisions? For example,
the OCC could determine that the reserves must be held at State chartered
depository institutions, insured depository institutions, national banks, or trust
companies. These are the entities where permitted payment stablecoin issuers’
stablecoin reserves may be commingled in an omnibus account under section
10(c)(2)(A) of the GENIUS Act (12 U.S.C. 5909(c)(2)(A)). Should the regulation
state that the reserve assets must be held with United States eligible financial
institutions?
Please see Section III.A.4 for a discussion of the scope of eligible U.S. financial
institutions.

40

Question 174: Should the OCC apply the capital requirements in proposed
subpart E to the United States operations of foreign payment stablecoin issuers
registered with the OCC? If so, how should the OCC modify these capital
requirements to appropriately apply to the United States operations of foreign
payment stablecoin issuers?
The GENIUS Act does not give the OCC authority to impose capital requirements on
FPSIs. 106 To the extent the OCC can identify authority to the contrary, it should give due
regard and deference to comparable home-country capital requirements for relevant
FPSIs and their parents, and to the comparability findings required of Treasury before an
FPSI can make its payment stablecoins available in the United States.
Discretionary capital add-ons for the U.S. operations of FPSIs would risk applying
discriminatory capital requirements against FBOs already subject to Basel-aligned groupwide requirements, when compared to U.S. issuers whose obligations are confined to
domestic standards and who, under the GENIUS Act, deconsolidate the PPSI at parent
level for regulatory capital purposes.
Question 175: Are there particular requirements that apply to permitted payment
stablecoin issuers that should or should not apply to foreign payment stablecoin
issuers? Please describe any such requirement and why the requirement should
or should not apply.
Please see Section III.B above for a discussion of the OCC’s authority to impose
substantive requirements on FPSIs. Section 18 of the Act assigns Treasury and the OCC
different roles with respect to FPSIs, and the OCC’s role does not include imposing a
broader substantive regime on foreign issuers beyond the registration, monitoring and
rescission framework Congress provided. The OCC should defer to Treasury’s
determination of comparable regulation under Section 18, and limit the requirements it
imposes on FPSIs to the application process for FPSIs and for reporting, supervision, and
examination requirements for registered FPSIs.
Question 176: Section 5 of the GENIUS Act (12 U.S.C. 5904) refers to
“substantially complete” applications for permitted payment stablecoin issuers,
but section 18 of the Act (12 U.S.C. 5916) does not refer to “substantially
complete” applications with respect to foreign payment stablecoin issuers
registering with the OCC (section 18 does refer to a “substantially complete”
determination request to the Department of the Treasury). For parity, should the
implementing regulations refer to a “substantially complete” application for both
types of entities?
106

See Section III.B above for a discussion of the scope of the OCC’s authority to regulate FPSIs under
the GENIUS Act.

41

We believe the differences between the Section 5 application process and the Section 18
registration process are intentional. Section 5 of the Act establishes a licensing regime for
PPSIs that turns on a “substantially complete” application to become an issuer with the
OCC as primary regulator and supervisor, while Section 18 of the Act allows for the
registration of FPSIs that are already subject to comparable home-country regulation and
supervision.
Under Section 18, the “substantially complete” concept appears in connection with
Treasury’s comparability determination, not OCC registration. 107 That ordering is
important: Treasury first determines whether the foreign regulatory and supervisory
regime is comparable, and the OCC then acts on registration within the narrower role
Congress assigned to it. It should not be necessary for the OCC to create a new
“substantially complete” requirement in the FPSI registration process. Once Treasury has
been satisfied and made a comparability determination, the Act has already established
the basis for federal treatment of the FPSI. The OCC should defer to Treasury and make
determinations within 30 days of receiving a registration request once a comparability
determination has been made.
Question 182: Should the OCC adopt a capital requirement based on price risk,
credit risk, operational risk, or interest rate risk, including variations on any of
the proposals discussed above? Please provide any data supporting your views.
For example, should the OCC impose a charge for credit risk, such as a 2 percent
capital charge for uninsured deposits? Should the OCC impose a capital charge
to reflect the interest rate risk of certain reserve assets, such as Treasury
securities? Should the OCC impose a minimum operational risk capital charge
that scales with the size of the issuer, as discussed above (i.e., with a charge of 1
percent for small issuers with a smaller additional marginal charge applying at
certain thresholds)? Should any such operational charge be based, in part, on the
issuer’s recent losses?
The OCC should not impose a separate capital charge for uninsured deposits held as
reserve assets. The relevant counterparty credit risk and liquidity risk will vary by
counterparty bank and is best addressed through the PPSI’s risk management, including
deposit diversification, which in turn should take into account a bank’s own prudential
capital, liquidity, balance sheet capacity and supervisory requirements.
Please see Section III.A.1 above for additional discussion of uninsured deposits.
Question 190: Instead of satisfying risk-based or leverage capital requirements, a
Federal branch must maintain a capital equivalency deposit. This deposit is
calculated in part based on total liabilities of the Federal branch and would
107

See GENIUS Act, Section 18(b)(3).

42

include any liabilities associated with a stablecoin program. Are there options the
OCC should consider with respect to calculation of the capital equivalency
deposit for a Federal branch's stablecoin program?
Please see Section III.A.7.c above.
Question 197: The OCC considered whether to reduce assessment for institutions
subject to subpart B whose GENIUS Act-related activities would be subject to
joint or coordinated review as between the OCC and either State permitted
stablecoin regulators or foreign payment stablecoin regulators. The
appropriateness of assessing one or more classes of institutions subject to subpart
B at lower rates would depend on whether the cost of supervising those
institutions' GENIUS Act-related activities is in fact shared jointly with another
regulator such that the cost to the OCC is meaningfully lower than the cost of
assessing national banks and Federal savings associations. Based on the OCC's
supervisory experience in similar circumstances involving joint or coordinated
circumstances, in the agency’s judgement it is not likely that the costs will be any
lower. The OCC nevertheless seeks comments or any information that may
support adopting alternative assessment methodologies under proposed subpart B
for all or a subset of institutions subject to subpart B and subject to joint or
coordinated supervision in connection with their GENIUS Act-related activities,
such as applying a discount in the range of 35 to 55 percent to Foreign or State
qualified payment stablecoin issuers, or both, to reflect shared supervisory
jurisdiction. In addition, the OCC requests comment on whether the 35 to 55
percent range is appropriate.
Please see Section III.B.4 above.
Question 203: Should the proposed rule explicitly address permitted payment
stablecoin issuers that also issue/redeem the same or similar stablecoins in one or
more foreign jurisdictions? Could these issuers be subject to additional risks or
operational challenges that are not sufficiently addressed by the proposed rule?
To what extent should stablecoin holders be able to distinguish between the same
or similar stablecoins issued under the GENIUS Act versus another regulatory
regime? If the holder should be able to establish that it is holding a GENIUS Act
compliant stablecoin, how should the OCC assist the holder in making this
determination? For example, should the OCC impose required disclosures or
technical requirements, such as through smart contracts, including those that use
wrappers or other techniques?
PPSIs should be permitted to issue and redeem the same or similar stablecoins in one or
more foreign jurisdictions, and the OCC should avoid adopting prescriptive requirements,
such as separate labeling, wrapper or smart-contract requirements, that could disrupt
global issuance and redemption models or conflict with disclosure or technical

43

requirements imposed by foreign regulatory frameworks. Overly restricting the issuance
of the same or similar stablecoins in one or more jurisdictions could lead to market
fragmentation and harm U.S. leadership in digital asset markets, contrary to the
Administration’s goals. 108
Question 204: What additional issues could arise with respect to a business model
where a foreign affiliate issues or redeems payment stablecoins abroad? How
should the OCC address these issues?
The IIB ANPR Letter describes the urgent need for guidance clarifying the extraterritorial
scope of the GENIUS Act to mitigate the risk of market fragmentation and provide
reasonable pathways for issuers and intermediaries that intend to operate outside the
United States to do so without unintentionally violating U.S. law. Because Treasury, not
the OCC, is responsible for addressing these issues under the GENIUS Act’s regulatory
framework, we have not addressed them in detail in this letter, but we have included a
brief explanation of the issue below.
Section 3 of the Act makes it unlawful for any person other than a PPSI to issue a
payment stablecoin “in the United States” and for a DASP to offer or sell a payment
stablecoin issued by a non-PPSI to a person “in the United States.” The Act does not,
however, otherwise define these jurisdictional terms.
There are already numerous stablecoin issuers, including bank-affiliated issuers and
subsidiaries of U.S. companies, serving their local markets in important jurisdictions
outside the United States, including, for example, the EU and Japan. More are certain to
appear as more jurisdictions establish regulatory regimes for issuing stablecoins. As the
Section 3(a) prohibition goes into effect, these issuers need guidance on how they can
continue to operate outside the United States without unintentionally violating U.S. law
and potentially incurring criminal liability under Section 3(f) of the Act. DASPs will also
need clarity on how to comply with the provisions of Section 3(b) of the Act.
A lack of clear guidance and safe harbors is highly likely to chill legitimate overseas
markets, harm cross-border interoperability, create negative reputation effects for the
United States and undermine the Administration’s objective of fostering a robust, wellregulated international market environment under U.S. leadership.

*

108

*

See PWG Report at 61.

44

*

The IIB appreciates the opportunity to submit these comments. We look forward to
engaging with Treasury and other federal and state regulators as they implement the
GENIUS Act.
Sincerely,

Beth Zorc
Chief Executive Officer
Institute of International Bankers
[email protected]

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