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

The asset administration big pushes again on proposed restrictions it says might hamper stablecoin reserve innovation with out bettering 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 belongings, 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 Might 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 belongings federally chartered stablecoin issuers, often known as permitted cost stablecoin issuers (PPSIs), might 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 cost stablecoins — digital tokens pegged to a steady worth, mostly the U.S. greenback. To difficulty a stablecoin below the legislation, an organization should receive federal or state authorization and again each token in circulation with high-quality liquid belongings. 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 strategy of writing the detailed guidelines that flesh out precisely what “high-quality liquid belongings” 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 vital consideration from monetary establishments with a stake within the end result.

The 20% Cap BlackRock Desires Gone

Probably the most contentious ingredient BlackRock focused is a proposed 20% ceiling on tokenized reserve belongings. 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 — that means belongings that exist on a blockchain quite 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 an alternative, danger is pushed by three well-understood components: credit score high quality (the chance the issuer might be paid again), period (how lengthy till the asset matures, which impacts sensitivity to rate of interest modifications), and liquidity (how shortly and at what price the asset will 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 belongings

Why BlackRock Has Pores and skin within the Sport

This isn’t merely a matter of regulatory philosophy for BlackRock. The agency operates BUIDL, one of many largest tokenized Treasury funds on the earth, with roughly $2.6 billion in belongings below administration. BUIDL provides greater than 90% of the reserves backing two distinguished 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 — slicing off a significant distribution channel for one in all BlackRock’s flagship digital asset merchandise.

BlackRock’s involvement within the stablecoin ecosystem goes additional. In October 2024, the agency retooled its Choose Treasury Primarily based 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 on the lookout for compliant reserve merchandise.

The agency’s BUIDL fund holds practically $2.6 billion in belongings (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 belongings — 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 might trigger PPSIs to keep away from ETFs altogether, even when these funds maintain nothing however authorities securities that will individually qualify as reserves.

BlackRock additionally referred to as for eligible Treasury ETFs to obtain the identical quantitative protected harbor remedy that authorities cash market funds (MMFs) presently take pleasure in below the proposal — that means they might be routinely presumed to fulfill reserve high quality requirements quite 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-compulsory quantitative protected harbor. Possibility B, in contrast, would make strict quantitative limits obligatory for all issuers daily, 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 might power issuers into suboptimal reserve administration selections based mostly on arbitrary numerical thresholds quite 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 have to look by way 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 Record

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 belongings. These devices carry restricted worth volatility as a result of their coupons reset weekly in keeping 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 belongings for eligibility sooner or later — a procedural safeguard in opposition to 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 centered on capital necessities, arguing the OCC ought to impose increased capital fees on uninsured demand deposits held as stablecoin reserves.

The OCC’s rulemaking is one in all 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 Overseas 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 world head of liquidity and financing, and Benjamin Tecmire, head of U.S. regulatory affairs.