Treasury Secretary Scott Bessent compared the GENIUS Act to the National Currency Act of 1863 on Oct. 21, the day the Office of the Comptroller of the Currency (OCC) released its 721-page stablecoin final rule.
He called the law a cornerstone of America’s position as the world’s crypto capital.
The American Bankers Association (ABA) responded the same day, saying the final rule gives indirect stablecoin rewards room and invites deposit flight that would weaken bank lending.
As Eleanor Terrett reported, the ABA said:
“Attempting to address deposit flight and economic harm after it has occurred is the wrong approach.”
The 1863 law standardized money issued by national banks, and the new rule standardizes money issued by a new class of regulated payment stablecoin issuers.
The OCC left the statute’s ban on issuers paying interest or yield for holding or using their tokens in place. It dropped a proposed rebuttable presumption aimed at rewards routed through affiliates and intermediaries, and it chose case-by-case review while declining to exempt existing rewards programs.
The ABA objects to that choice, and the defensible description is that the rule lets third-party reward arrangements be judged one at a time.
Comptroller Jonathan Gould’s emphasis ran to reserve backing, redemption standards and risk management. A quieter set of edits in those same reserve provisions decides where the money behind a digital dollar sits.
The stablecoin reserve edits
The OCC cut the minimum immediately available liquidity from 10% of reserves to 5%. It dropped a proposed insured-deposit allocation of 0.5% of reserves, capped at $500 million, for issuers with at least $25 billion outstanding.
It also removed a restriction that capped required daily liquidity at 50% in any one eligible institution, and it declined to require issuers to place reserves with community banks. Full backing stays in place, with reserve value required to match outstanding issuance.
A hypothetical issuer with $100 billion of stablecoins shows the scale. The immediate-liquidity floor falls from $10 billion to $5 billion, and the separate $500 million insured-deposit requirement falls to zero.
A separate 40% cap on exposure to any single counterparty survives with its exceptions, so removing the daily-liquidity limit keeps a ceiling on concentration.
The 5% can be met with demand deposits, other deposits withdrawable at any time, on-demand share accounts, or money credited to a Federal Reserve Bank account.
That makes the $5 billion difference a statement about the form of liquidity, and an issuer’s eligibility for Fed account access depends on its own eligibility.
Take a hypothetical 24-hour run of $12 billion in redemptions against an issuer holding the minimum. The shortfall to cover from other sources is $2 billion under the proposed floor and $7 billion under the final one. The OCC expects issuers to monetize assets quickly and submit to stress testing.
The agency argued that high-quality assets, including Treasury securities, can be sold quickly, and spreading insured deposits across many institutions adds operational complexity, counterparty exposure, and settlement-access constraints.
The OCC identifies two risks pointing in opposite directions for community banks. Local banks could lose deposits to stablecoins, and large issuer balances could carry their own liquidity risks, so the OCC declines to require the relationship for either side.
Where the dollars go
A Federal Reserve paper by Jessie Jiaxu Wang from December 2025 describes three paths for a $1,000 customer move from checking into a stablecoin.
If the issuer holds bank deposits, the money may land at another bank, and aggregate deposits stay largely intact. If it buys Treasury bills, the proceeds may return to bank accounts through later transactions. If the buyer is overseas, the issuer may bring new dollar funding into the US system.
A dollar leaving a checking account therefore has several possible destinations, and the New York Fed’s evidence depends on the type of deposit that arrives.
The New York Fed’s February 2026 study by Michael Junho Lee and Donny Tou tracked banks that began servicing a stablecoin issuer.
Their interbank payment activity rose 67% over nine months, their reserve balances rose about $1.5 billion, and their loan share of assets ran 14 percentage points below that of comparable banks.
Reserve volatility climbed 55% for a one-standard-deviation increase in primary-market activity. The results describe the studied banks in a past episode and show a bank gaining stablecoin business while holding a smaller share of loans.
The White House Council of Economic Advisers’ (CEA) September model estimates that an effective yield ban would raise bank lending by $2.1 billion in the baseline, about 0.02% of loans, and by $531 billion under stacked extreme assumptions.
The CEA models a policy ban, and the New York Fed measures observed balance sheets, so the two address different margins.
The Fed noted that money market funds reached about $220 billion by the end of 1982, roughly 15% of bank deposits, and banks responded with new products, lobbying and funding changes.
What the January test measures
The rule takes effect Jan. 18, 2027, alongside the GENIUS Act, and anti-money-laundering requirements go through separate rulemaking. Global stablecoin supply stood at $301 billion on Oct. 21, according to DeFiLlama.
If issuers build bank relationships for custody, payments, and reserve management, with deposits recycling through banks and Treasury purchases returning to bank accounts, stablecoin growth coexists with credit.
A hypothetical $100 billion of new stablecoins with $40 billion held in bank deposits puts $60 billion in other eligible assets and gives banks a visible role.
If issuers rely on securities and a narrow set of banking partners, with $5 billion in deposits and $95 billion in other reserves, smaller banks lose access to low-cost funding. Recipient banks face concentrated payment and redemption flows.
The $35 billion gap between those two cases is an allocation difference, and the final effects run through securities markets, bank liquidity choices and lending. Issuer reserve reports, bank and custodian concentration, recipient banks’ liquid assets and loans as a share of assets, compared with peers, will show which case unfolds.
Bessent invoked a law that sets the rules for who can issue American money. Meanwhile, the OCC’s rule lets the new issuers decide where the reserves behind it sit, and the 2027 filings will show whether those choices keep bank lending funded.
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