Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Blockchain Association, AFC urge OCC to broaden and clarify GENIUS Act stablecoin proposal, (May 7, 2026)

By Shashi Kant, BALLB, LL.M.

Comment letters press agency to narrow custody burdens, clarify reserve and redemption rules, and avoid framework that favors large incumbents over newer entrants.

Comments filed in response to the Office of the Comptroller of the Currency’s proposed rule implementing the GENIUS Act continued to reflect wide disagreement over how tightly the agency should regulate stablecoin issuers and related custody activity, with the Blockchain Association and the American Fintech Council urging the OCC to revise the proposal to provide greater regulatory clarity, reduce operational uncertainty, and avoid requirements they said could impede innovation. Their submissions follow earlier comments from bankers, consumer groups, and state regulators that pressed the agency from different directions on yield restrictions, issuer oversight, state-federal coordination, and consumer-protection safeguards.

The OCC’s February proposal would establish a federal framework for permitted payment stablecoin issuers and certain custodial activities under its supervision, addressing licensing, reserve assets, redemption, risk management, applications, and related operational requirements. In comments submitted in early May, both groups said the proposal leaves important questions unresolved, but they approached the rule from a more market-access and innovation-oriented perspective than many banking and consumer advocates.

Blockchain Association says proposal should not import bank-style assumptions into stablecoin framework. In its comment letter, the Blockchain Association argued that the OCC should tailor the GENIUS Act framework to the operational realities of blockchain-based payment stablecoins rather than relying too heavily on supervisory concepts drawn from traditional banking. The group said the proposal’s treatment of redemption, custody, reserve monitoring, and operational controls risks creating ambiguity that could discourage compliant issuers and custodians from entering the market. The association urged the OCC to clarify the scope of custodial responsibilities and to avoid imposing reserve-monitoring expectations on custodians where those obligations should rest with issuers. It also called for clearer, more technology-neutral treatment of redemption rights and processes, arguing that the proposal should recognize multiple operational models for stablecoin issuance and distribution rather than implicitly favoring one structure over others.

The group also said the OCC should be careful not to create requirements that would be difficult for decentralized or blockchain-native business models to satisfy in practice without clear statutory basis. According to the association, uncertainty over supervisory expectations could leave firms unable to determine which functions require approval, how responsibilities are allocated among issuers and service providers, and how compliance will be judged in examinations.

AFC calls for clarity, responsible innovation, and workable licensing path. The AFC likewise urged the OCC to provide a clearer and more workable regulatory path for responsible stablecoin activity. In a press release accompanying its comment letter, the AFC said the agency should strike a balance between market integrity and innovation and should ensure the final rule supports compliant participation by regulated fintech firms rather than only the largest incumbents. The AFC’s filing called for clearer standards around licensing, reserves, redemption, governance, and operational risk management. The group said firms need greater certainty about what the OCC will require in applications, how it will assess business models, and how ongoing supervisory obligations will apply after approval. The AFC also emphasized the need for rules that can accommodate responsible innovation without creating uncertainty that deters market entry. In addition, the AFC urged the OCC to align the proposal with broader federal regulatory efforts and to avoid unnecessary inconsistencies with parallel frameworks developing elsewhere. The group said a coherent federal approach is especially important in stablecoin markets, where firms may otherwise face overlapping or conflicting expectations that complicate compliance and product development.

Comments add to already divided GENIUS Act record. The Blockchain Association and AFC comments arrive as the record on the OCC’s GENIUS Act proposal grows more crowded and more divided. Banking groups previously urged the OCC to strengthen the proposal’s prohibition on indirect yield and close what they described as loopholes that could turn stablecoins into de facto interest-bearing deposit substitutes (see Banking and Finance Law Daily, May 4, 2026). Other industry and policy groups pressed for changes to capital, reserve, and supervisory provisions, while Better Markets argued for a more restrictive approach (see Banking and Finance Law Daily, May 5, 2026). Consumer groups and the Conference of State Bank Supervisors later urged the OCC to slow down, warning that the proposal still leaves significant questions about redemption, insolvency, consumer protection, and state-federal coordination unresolved (see Banking and Finance Law Daily, May 6, 2026).

Companies: American Fintech Council; Blockchain Association

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