Fintechnically Speaking

Yesterday, February 25, 2026, the Office of the Comptroller of the Currency (“OCC“) issued a proposed rulemaking to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (the “Proposed Rule“).

Here’s a brief rundown of what was released:

1. Purpose – To implement the GENIUS Act (12 U.S.C. 5901 et seq.) as it applies to: (i) Permitted payment stablecoin issuers under OCC jurisdiction; (ii) Foreign payment stablecoin issuers; and (iii) Certain custody activities conducted by OCC-supervised entities.

2. The proposal establishes a robust (and relatively traditional) regulatory framework for the issuance of payment stablecoins, including capital, reserve, custody, and licensing requirements.

3. The Proposed Rule outlines the “self-executing” provisions of the GENIUS Act (not addressed in the rulemaking – those provisions which, for example, clarify the exclusive role of the OCC in overseeing Federal qualified payment stablecoin issuers; ensure that Federal qualified payment stablecoin issuers and subsidiaries of OCC-regulated insured depository institutions approved to be permitted payment stablecoin issuers are subject to only one licensing requirement—the OCC’s; and address the effect of the GENIUS Act on State consumer protection laws.

4. Request public comment on 211 unique questions on the proposal and its implementation. Each of these questions appear below (just kidding – click on the link to the Proposed Rule and scan for what interests you the most).

5. New Part 15 to Chapter 12 of the Code of Federal Regulations – Stablecoins.

6. Monthly reporting (template form included in the Proposed Rule) for Payment Stablecoin Issuers – signed by the CEO and CFO!

7. Listing of Permitted Activities

(1) Issue payment stablecoins;

(2) Redeem payment stablecoins;

(3) Manage reserves related to the issuance or redemption of payment stablecoins, including purchasing, selling, and holding reserve assets or providing custodial services for reserve assets, consistent with applicable State and Federal law;

(4) Provide custodial or safekeeping services for payment stablecoins, required reserves, or private keys of payment stablecoins, consistent with subpart C of this part;

(5) Assess fees associated with purchasing or redeeming payment stablecoins;

(6) Act as principal or agent with respect to any payment stablecoin;

(7) Pay fees to facilitate customer transactions; and

(8) Undertake any other activities that directly support any of the activities described in paragraphs (a)(1) through (4) of this section.

and Prohibited Activities

(1) Use a deceptive name by using any combination of terms relating to the United States Government, including “United States,” “United States Government,” and “USG,” in the name of the payment stablecoin. This prohibition does not apply to abbreviations relating directly to the currency to which the payment stablecoin is pegged, such as “USD”.

(2) Market a payment stablecoin in such a way that a reasonable person would perceive the payment stablecoin to be: (i) Legal tender as described in 31 U.S.C. 5103; (ii) Issued by the United States; or (iii) Guaranteed or approved by the Government of the United States.

(3) Directly or through implication represent that payment stablecoins are backed by the full faith and credit of the United States, guaranteed by the United States Government, or subject to Federal deposit insurance or Federal share insurance.

(4) Pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin. (i) The OCC presumes that a permitted payment stablecoin issuer is paying interest or yield (whether in cash, tokens, or other consideration) to the holder of a payment stablecoin solely in connection with the holding, use, or retention of such payment stablecoin if: (A) The permitted payment stablecoin issuer has a contract, agreement, or other arrangement with an affiliate of the issuer or related third party to pay interest or yield to the affiliate or related third party; (B) The affiliate or related third party identified in paragraph (c)(4)(i)(A) of this section or, if the person is a related third party, an affiliate of such related third party has a contract, agreement, or other arrangement to pay interest or yield (whether in cash, tokens, or other consideration) to a holder of any payment stablecoin issued by the permitted payment stablecoin issuer solely in connection with the holding, use, or retention of such payment stablecoin; and (C) To the extent the person, or an affiliate of the person, identified in paragraph (c)(4)(i)(A) is a related third party of the permitted payment stablecoin issuer because the permitted payment stablecoin issuer issues payment stablecoins on the related third party’s behalf or under the related third party’s branding, the arrangement identified in paragraph (c)(4)(i)(B) of this section considers the holder of the payment stablecoin to be the holder of a payment stablecoin issued by the permitted payment stablecoin issuer on the related third party’s behalf or under the related third party’s branding. (ii) For purposes of paragraph (c)(4)(i) of this section, a related third party means: (A) A person offering to pay interest or yield to payment stablecoin holders as a service; and(B) Any person that the issuer issues payment stablecoins on the person’s behalf or under the person’s branding. (iii) A permitted payment stablecoin issuer may rebut the presumption in paragraph (c)(4)(i) of this section by submitting written materials that, in the OCC’s judgment, demonstrate that the contract, agreement, or other arrangement is not prohibited under paragraph (c)(4) of this section and is not an attempt to evade the prohibition.

(5) Pledge, rehypothecate, or reuse any reserve assets required under § 15.11 either directly or indirectly (e.g., through a third-party custodian of the reserve assets) except for the purpose of: (i) Satisfying margin obligations in connection with investments in permitted reserves under § 15.11(b)(4) or (5); (ii) Satisfying obligations associated with the use, receipt, or provision of standard custodial services; or (iii) Creating liquidity to meet reasonable expectations of requests to redeem payment stablecoins, such that reserves in the form of Treasury bills with a maturity of 93 days or less may be sold as purchased securities in repurchase agreements, provided that either: (A) The repurchase agreements are cleared by a clearing agency registered with the Securities and Exchange Commission; or (B) The permitted payment stablecoin issuer receives prior approval from the OCC. All repurchase agreements under this paragraph (c)(5) wherein the Treasury bills that are sold as purchased securities have a maturity of 93 days or less are approved by the OCC.

(6) Engage in any activity that the OCC determines is an evasion of the requirements of section 4 of the GENIUS Act (12 U.S.C. 5903) or this part.

More to come on this, but big time release with a very robust proposed regulatory framework. Stay tuned!

On December 9, 2025, the Office of the Comptroller of the Currency (“OCC”) issued Interpretive Letter #1188 (the “Interpretive Letter”) which confirms that national banks may engage in riskless principal crypto-asset transactions with and on behalf of their customers.

The Interpretive Letter indicates that “[i]n a riskless principal transaction, an intermediary purchases an asset from one counterparty for immediate resale to a second counterparty” who is the ultimate purchaser of the asset. In these transactions, the intermediary is the national bank, and its “purchase from the initial counterparty is conditioned on an offsetting order from a second counterparty to purchase the same asset from the [national bank].” The offsetting purchase and sale effectively occur simultaneously and the national bank would not actually hold the asset. 

The OCC indicates that in these transactions the intermediary (i.e., the national bank) conducts itself as the legal and economic equivalent of a broker acting as agent.  These transactions are considered “riskless” because the intermediary does not enter into the transaction without also having entered into an immediate offsetting transaction.  However, this doesn’t mean that there is absolutely no risk. 

For crypto-asset securities transactions, the Interpretive Letter quickly articulates that such transactions are permissible for national banks under 12 U.S.C. §24(Seventh) as part of the business of dealing in securities by purchasing and selling securities without recourse and on the order of a customer. 

The OCC then turns to examine the authority for national banks to engage in riskless principal transactions in crypto-assets that are not securities.  The analysis again considers the authorities granted to national banks under 12 U.S.C. §24(Seventh) and the incidental powers “necessary to carry on the business of banking,” which is left undefined by the statute.   However, OCC regulations at 12 C.F.R. §7.1000(c)(1) consider the following factors to determine whether an activity is part of the business of banking:

(i) Whether the activity is the functional equivalent to, or a logical outgrowth of, a recognized banking activity;

(ii) Whether the activity strengthens the bank by benefiting its customers or its business;

(iii) Whether the activity involves risks similar in nature to those already assumed by banks; and

(iv) Whether the activity is authorized for State-chartered banks.

On these riskless principal transactions in crypto-assets that are not securities, the OCC quickly confirms that the first three factors above “weigh strongly in favor of determining that [such transactions] are part of the business of banking.”  Finally on the fourth factor above, the OCC states that “[s]tate banks have long engaged in riskless principal transactions with respect to securities, and state regulatory frameworks concerning crypto-asset activities conducted by state banks are continuing to develop” and that “[i]n light of developing state regulatory frameworks with respect to crypto-asset activities, and states banks’ clear authority to engage in riskless principal securities transactions, this factor does not weigh against determining that national banks may engage in riskless principal crypto-asset transactions.” 

So, what are the key takeaways?

1. Current OCC leadership remains focused on allowing national banks to engage in crypto-related activities and welcomes new applications to do so.
2. While these transactions are labeled as “riskless principal” transactions, they are not completely risk-free.  The OCC itself indicates that (i) there is still counterparty credit risk, as in a non-crypto riskless principal transaction, and (ii) there may also be operational risk presented with these crypto-asset transactions because of the use of new technologies.
3. Regardless of whether a bank is offering crypto-related products or services, these developments are critical to follow. Elements of the traditional financial architecture are changing and it will have implications across the board.