BlackRock Urges OCC to Drop Tokenized Reserve Cap, Broaden Eligible Property in GENIUS Act Remark Letter

The asset administration large pushes again on proposed restrictions it says may hamper stablecoin reserve innovation with out enhancing security

BlackRock, the world’s largest asset supervisor, has formally requested the U.S. Workplace of the Comptroller of the Forex (OCC) to desert a proposed cap on tokenized reserve property, arguing the restriction is pointless and will stifle one of many fastest-growing corners of the digital asset market — with out making stablecoins any safer.

The agency submitted a 17-page remark letter to the OCC on Could 1, 2025, touchdown on the ultimate day of the company’s 60-day public remark window. The letter focuses on proposed guidelines implementing the Guiding and Establishing Nationwide Innovation for U.S. Stablecoins (GENIUS) Act — the landmark federal stablecoin laws signed into legislation by President Trump final July — and particularly targets provisions governing what property federally chartered stablecoin issuers, generally known as permitted fee stablecoin issuers (PPSIs), could maintain in reserve.

What Is the GENIUS Act and Why Does It Matter?

Earlier than diving into BlackRock’s objections, it helps to grasp the regulatory panorama. The GENIUS Act created the primary complete federal framework for fee stablecoins — digital tokens pegged to a secure worth, mostly the U.S. greenback. To subject a stablecoin below the legislation, an organization should get hold of federal or state authorization and again each token in circulation with high-quality liquid property. The aim is to make sure that stablecoin holders can at all times redeem their tokens at face worth, even in a market stress occasion.

The OCC is now within the technique of writing the detailed guidelines that flesh out precisely what “high-quality liquid property” means. Its 376-page draft proposal, printed within the Federal Register on March 2, included greater than 200 questions soliciting public suggestions — and it attracted important consideration from monetary establishments with a stake within the final result.

The 20% Cap BlackRock Desires Gone

Essentially the most contentious aspect BlackRock focused is a proposed 20% ceiling on tokenized reserve property. The OCC floated this threshold as a possible guardrail on how a lot of a stablecoin issuer’s reserves may very well be held in tokenized kind — which means property that exist on a blockchain reasonably than in conventional custodial accounts.

BlackRock referred to as the cap “extraneous” to the OCC’s regulatory goals. In its letter, the agency argued that what makes a reserve asset dangerous or protected has nothing to do with whether or not it lives on a distributed ledger. As a substitute, danger is pushed by three well-understood components: credit score high quality (the chance the issuer shall be paid again), length (how lengthy till the asset matures, which impacts sensitivity to rate of interest adjustments), and liquidity (how shortly and at what price the asset may be transformed to money). A tokenized U.S. Treasury invoice, BlackRock argued, carries the identical danger profile as a non-tokenized one — as a result of it’s, basically, the identical underlying asset.

BlackRock is urging the OCC to drop a proposed 20% cap on tokenized reserve property

Why BlackRock Has Pores and skin within the Recreation

This isn’t merely a matter of regulatory philosophy for BlackRock. The agency operates BUIDL, one of many largest tokenized Treasury funds on the planet, with roughly $2.6 billion in property below administration. BUIDL provides greater than 90% of the reserves backing two outstanding stablecoins: Ethena’s USDtb and Jupiter’s JupUSD, a Solana-based product. If the OCC’s 20% cap had been to take impact below the GENIUS Act framework, BUIDL’s means to develop as a reserve asset for federally regulated stablecoins can be materially constrained — chopping off a significant distribution channel for one in every of BlackRock’s flagship digital asset merchandise.

BlackRock’s involvement within the stablecoin ecosystem goes additional. In October 2024, the agency retooled its Choose Treasury Based mostly Liquidity Fund (BSTBL) to align with GENIUS Act necessities, giving it a 5 p.m. ET buying and selling deadline and a conservative, Treasury-heavy mandate designed particularly to serve stablecoin issuers searching for compliant reserve merchandise.

The agency’s BUIDL fund holds almost $2.6 billion in property (Supply: RWA.xyz).

Treasury ETFs: Clarification Wanted

Past the tokenization cap, BlackRock urged the OCC to explicitly verify that exchange-traded funds (ETFs) investing solely in eligible reserve property — reminiscent of Treasury ETFs — qualify as lawful reserves below Part 4 of the GENIUS Act. The agency warned that the present draft’s ambiguity on this level may trigger PPSIs to keep away from ETFs altogether, even when these funds maintain nothing however authorities securities that might individually qualify as reserves.

BlackRock additionally referred to as for eligible Treasury ETFs to obtain the identical quantitative protected harbor therapy that authorities cash market funds (MMFs) at present take pleasure in below the proposal — which means they’d be routinely presumed to fulfill reserve high quality requirements reasonably than requiring case-by-case evaluation.

Diversification Framework: Possibility A Over Possibility B

The OCC’s draft supplied two approaches to order diversification necessities. BlackRock backed “Possibility A,” which pairs a principles-based normal with an non-obligatory quantitative protected harbor. Possibility B, in contrast, would make strict quantitative limits necessary for all issuers on daily basis, together with a 40% single-institution focus cap and a 20-day weighted common maturity ceiling.

BlackRock argued Possibility B’s inflexible every day compliance necessities may power issuers into suboptimal reserve administration selections primarily based on arbitrary numerical thresholds reasonably than sound danger administration. Possibility A’s flexibility, the agency contended, permits issuers to handle reserves in a approach that displays precise market situations.

Even inside Possibility A, BlackRock proposed a number of technical refinements. It requested the OCC to exclude “self-custodied” authorities cash market fund shares from the 40% focus restrict, make clear that PPSIs don’t must look by means of fund holdings to use focus limits to a fund’s custodians or service suppliers, and permit same-day-settlement authorities MMFs to rely towards the 30% weekly liquidity requirement.

Increasing the Eligible Asset Checklist

BlackRock additionally beneficial that the OCC add U.S. Treasury floating-rate notes with as much as two years of remaining maturity to the listing of eligible reserve property. These devices carry restricted value volatility as a result of their coupons reset weekly in step with prevailing charges, making them well-suited to stable-value reserve portfolios. The agency additional urged the company to determine a proper, clear course of for evaluating extra property for eligibility sooner or later — a procedural safeguard towards the listing turning into outdated as monetary markets evolve.

Broader Context

BlackRock was not alone in submitting on the deadline. The Brookings Establishment submitted its personal letter targeted on capital necessities, arguing the OCC ought to impose greater capital costs on uninsured demand deposits held as stablecoin reserves.

The OCC’s rulemaking is one in every of a number of working in parallel. The FDIC superior its personal proposed stablecoin framework in early April. The Treasury Division, the Monetary Crimes Enforcement Community (FinCEN), and the Workplace of International Property Management (OFAC) have individually proposed guidelines overlaying anti-money laundering packages and sanctions compliance. All are converging on a January 2027 compliance deadline.

The letter was signed by Roland Villacorta, BlackRock’s international head of liquidity and financing, and Benjamin Tecmire, head of U.S. regulatory affairs.