US OCC Sets 2-Business-Day Stablecoin Redemption Rule, Bars Automatic Extensions During Runs

The Office of the Comptroller of the Currency finalized redemption deadlines, reserve-asset requirements and capital rules for stablecoin issuers. The framework bars issuers from automatically extending redemption deadlines even during large-scale redemption waves and requires part of reserve assets to be held in immediately withdrawable funds.

The OCC announced the implementing rule for the GENIUS Act on Oct. 21. It applies to OCC-supervised bank subsidiaries, federally chartered nonbank issuers and foreign issuers. The rule will take effect on Jan. 18, 2027.

Issuers must generally process redemption requests that satisfy legal requirements, including customer verification, within two business days. A draft rule had allowed the deadline to be extended to seven days if redemption requests exceeded 10% of outstanding issuance within 24 hours. That provision was removed from the final rule. Issuers that need more time must seek an extension separately.

Reserve assets must equal or exceed the amount of stablecoins in circulation. At least 5% of those reserves must be held in immediately available funds, including demand deposits. The OCC set a minimum capital floor of $5 million and said it may require more capital depending on business complexity and other factors. It also requires operating funds to prepare for a shutdown or other business disruptions.

The agency kept its ban on issuers paying interest or yield in return for holding, using or maintaining stablecoins. It dropped a draft provision that would have presumed certain compensation paid through affiliates or third parties to be unlawful. The OCC said it will assess the substance of transactions to determine whether the prohibition is being circumvented. Existing reward programs will not receive a blanket exemption.

Banks objected, saying the standard for regulating indirect compensation had become less clear. The Bank Policy Institute said "the scope of what is permitted and the process for making that determination have become unclear" and argued that stablecoin rewards could increase the risk of deposit outflows from banks.