On October 21, the OCC issued a final rule implementing the GENIUS Act for permitted and foreign payment stablecoin issuers under its jurisdiction and for related custody activities of OCC-supervised entities. The rule finalizes the agency’s proposal (previously covered by this Orrick Insight here). The rule and the GENIUS Act take effect January 18, 2027. Among the changes, the OCC dropped its proposed “rebuttable presumption” that certain arrangements with affiliates or related third parties resulting in payments to holders violate the statutory ban on paying interest or yield “solely in connection with the holding, use, or retention” of a payment stablecoin. The agency cited the market’s early stage and said the presumption could have been “both overinclusive and underinclusive.” Instead, the OCC will monitor arrangements through application review and supervision and evaluate each on its facts and circumstances.

The agency declined to define “interest” or “yield” and retained its authority to address evasion. The OCC explained that yield paid by an issuer’s agent on the issuer’s behalf remains prohibited. However, payments through intermediaries made for reasons beyond holding or using the stablecoin, as well as transaction-based payments that are not interest or yield or are not tied “solely” to holding, use or retention, may fall outside the ban, depending on the facts. The agency said it will act on violations and issue guidance as appropriate, expects eventually to propose a clarifying rule, and will consider amendments if Congress revises the prohibition. On redemption, the OCC kept the proposal’s two-business-day ceiling but eliminated the proposed automatic seven-day extension, which it agreed with commenters “could prove pro-cyclical.” Instead, issuers must notify the OCC within 24 hours when redemption requests exceed 10 percent of a brand’s outstanding issuance value in a single 24-hour period and may request an extension, an authority the agency expects to use “sparingly.”

The final rule also eases several reserve requirements and simplifies the capital elements. It adopts the proposal’s principles-based diversification option, paired with a narrower set of mandatory limits, drops the proposed weekly liquidity and weighted-average-maturity limits, and permits withdrawals of excess reserves at any time after due diligence, rather than monthly. At the same time, issuers must keep reserves sufficient for timely redemption under adverse conditions, potentially including a buffer, and meet expanded monetization and new stress-testing standards. Issuers must meet individualized minimum capital requirements through total equity after deductions, such as intangible assets. They must also hold an operational backstop equal to 12 months of total expenses, up to 50 percent of which may be funded by qualifying debt, and must notify the OCC within 24 hours of a capital or backstop shortfall. BSA/AML and sanctions requirements are being addressed in a separate rulemaking coordinated with the Treasury.

In accompanying guidance, the OCC said it “generally expects to grant” waivers of the act’s prior approval requirement for issuers already operating in the U.S. that have submitted a “substantially complete” application by January 18, 2027. The OCC added that it has not identified compelling, generally applicable reasons to waive other requirements or to grant waivers to issuers not yet operating, though it will evaluate each request on its merits. The agency will begin accepting applications and waiver requests once the Office of Management and Budget approves the application forms. The OCC also released revised weekly and quarterly reporting forms for comment, with comments due November 23.