BlackRock challenges OCC’s 20% reserve cap for stablecoin issuers under GENIUS Act

BlackRock formally opposed the Office of the Comptroller of the Currency’s draft rules for the GENIUS Act, arguing that proposed limits on reserve assets are unnecessary. 

On Friday, the asset management company submitted a 17-page comment letter addressing the OCC’s 20% cap on tokenized assets. It argues that the proposal would choke its BUIDL fund and similar innovations. The firm’s letter also sought formal clarification on which Treasury-based instruments would be considered eligible reserves.

Instead of rigid limits, BlackRock is advocating a principles-based diversification framework. This proposal allows issuers to manage reserves based on risk characteristics rather than arbitrary thresholds.

What does BlackRock need the OCC to implement?

In its letter to the OCC, BlackRock largely focused on rules for permitted payment stablecoin issuers (PPSIs), the very group of federal stablecoin issuers. One of BlackRock’s biggest requests to the agency was to scrap the proposed 20% limit on tokenized reserves.

It characterized the restriction as completely unrelated to the OCC’s goals, and also explained that the true risks of a reserve asset aren’t necessarily about it being “tokenized” but about its liquidity, duration, and creditworthiness.

BlackRock is a dominant force in tokenized Treasuries; its $2.6 billion BUIDL fund currently backs 90% of the shares of both Jupiter’s JupUSD and Ethena’s USDtb. If this 20% cap goes through, it would materially inhibit BUIDL’s ability to scale as a primary backing of federal stablecoins.

A key part of the letter also asks the OCC to formally confirm if Treasury ETFs are qualifying assets under the GENIUS Act. The firm warned that, without clearer guidelines, issuers won’t risk holding ETFs and thus requested that these funds receive the same treatment as government money market funds.

Additionally, BlackRock supported the agency’s Option A strategy for diversifying reserves but noted that Option B would impose strict daily concentration and maturity limits. Option B would primarily impose daily compliance with a 40% single-entity exposure cap and a 20-day weighted maturity restriction across all issuers.

The company also recommended updating Option A to exempt self-managed money market shares from the 40% threshold and permit same-day settlement funds to aid liquidity mandates.

It also proposed adding Treasury floating-rate notes with shorter maturities, which reflect steady pricing and regular coupon resets, to the reserve list, alongside a more structured and transparent asset approval process.

BlackRock is not the first company to provide commentary on the OCC’s proposal. The Brookings Institution submitted its own feedback, pushing the OCC to set higher capital requirements for reserve holdings held in uninsured demand deposit accounts.

The FDIC also proposed a framework for stablecoin issuers

Aside from the OCC, the Federal Deposit Insurance Corporation also proposed rules in April to establish a regulatory framework for stablecoin issuers in line with the GENIUS Act.

Chantal Hernandez, counsel at the FDIC, even noted at the time that the rules would “clarify deposit insurance coverage of deposits that serve as reserve assets.”

The US Treasury, FinCEN, and OFAC also proposed a rule to counter the financing of terrorism (CFT) and to implement anti-money laundering (AML) measures.

Treasury Secretary Scott Bessent had noted, “This proposal will protect the US financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem.”

After the GENIUS Act was signed into law in July, some companies had to revamp their funds and systems, including BlackRock. BlackRock redesigned its BlackRock Select Treasury-Based Liquidity Fund (BSTBL) to align with the legislation and safely house stablecoin reserves.

The revamped fund now operates with a 5 p.m. ET deadline and maintains a conservative, Treasury-centric investment mix. Though with all the new proposals, if approved, crypto-related companies will have to consider more redesign.

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