Federal OCC guidance on 'Genius Act' leaves states room to shape yield, reserves and supervision

Yubeni Shrego, senior director of regulatory policy at the Conference of State Bank Supervisors, told the Commission to Study that the Office of the Comptroller of the Currency's 367-page notice of proposed rulemaking implementing the Genius Act raises far-reaching choices for states and banks.

Shrego said the OCC's proposal, issued about 10 days before the meeting, clarifies permissible activities for stablecoin issuers, reserve-valuation and liquidity expectations, risk-management standards, capital and an operational backup requirement, and a broad anti-evasion approach to yield payments. "I've been really impressed with the work your commission has done so far," Shrego said, before walking commissioners through the OCC's major design choices and the federal agencies' near-term deadlines for comments.

Why it matters: The OCC's approach could shape whether stablecoin issuers can rely on third-party arrangements that effectively pay holders a…